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Item 1.01
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Entry into a Material Definitive Agreement.
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On March 15, 2021, Pizza Hut Holdings, LLC, KFC Holding Co.
and Taco Bell of America, LLC (collectively, the “Borrowers”), each a wholly owned subsidiary of YUM! Brands, Inc.
(“YUM” or the “Company”), entered into a Refinancing Amendment No. 4 (the “Amendment”) to the
Credit Agreement, dated as of June 16, 2016 (as amended by Refinancing Agreement No. 1 dated as of March 21, 2017, Refinancing
Amendment No. 2 dated as of June 7, 2017 and Refinancing Amendment No. 3 dated as of April 3, 2018 and as further amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrowers, JPMorgan Chase
Bank, N.A., as Collateral Agent, Swing Line Lender, an L/C Issuer and Administrative Agent, and the Lenders from time to time party
thereto, pursuant to which the Company refinanced its existing approximately $1.9 billion term loan B facility, approximately
$431 million term loan A facility and approximately $1.0 billion revolving facility through the issuance of a $1.5 billion term
loan B maturing March 15, 2028 (the “Term B Loan”), a $750 million term loan A maturing March 15, 2026 (the “Term
A Loan”) and a $1.25 billion revolving credit facility maturing March 15, 2026 (the “Revolving Facility”). The
interest rates applicable to the Term A Loan and to borrowings under the Revolving Facility will be based on either LIBOR or the
base rate, as determined by the Borrowers, plus a spread based on the Borrowers’ total leverage ratio. Such spread is initially
1.00% for LIBOR loans and 0.00% for base rate loans and ranges between 0.75% and 1.50% for LIBOR Loans and between 0.00% and 0.50%
for base rate loans based on the total leverage ratio . Borrowings under the Term Loan B accrue interest at an annual rate of either
LIBOR or the base rate, plus a spread of 1.75% for LIBOR loans and 0.75% for base rate loans. The “base rate” means
the greatest of (a) the Prime Rate then in effect, (b) the federal funds rate then in effect plus 0.5% and (c) the rate for one
month LIBOR rate then in effect plus 1.0%. The Term A Loan will amortize at 2.5% per annum during the second and third years following
closing and at 5.0% per annum during the fourth and fifth years following closing. The Term B Loan will amortize at 1.0% per year,
and is subject to a 6-month 1.00% soft call provision. The Amendment eases certain requirements with respect to mandatory prepayments,
and includes an increase to the limit of, and certain other revisions in connection with, incremental credit extensions. The Amendment
also eases certain requirements and restrictions, and increases certain baskets for, certain negative covenants, including the
investment, indebtedness and restricted payment covenants, and includes a single financial maintenance covenant requiring a total
leverage ratio not to exceed 5.00:1.00, which maximum level increases to 5.50:1.00 in certain circumstances following material
acquisitions. Further, the Amendment builds in a hardwired approach for the replacement of LIBOR, as well as QFC provisions and
revisions to bail-in provisions. All other material provisions of the Credit Agreement remain unchanged. The Credit Agreement contains
customary events of default, including (subject to certain materiality thresholds and grace periods) payment default, failure to
comply with covenants, material inaccuracy of representation or warranty, bankruptcy or insolvency proceedings, change of control
and cross-acceleration in respect of other material debt agreements.
The description of the Amendment and the
Credit Agreement set forth above is a summary only, is not complete and is qualified in its entirety by reference to the full and
complete terms contained in the Amendment, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K
and is incorporated herein by reference.