Restaurant Brands International Inc. Announces Launch of First Lien Senior Secured Notes Offering

Rhea-AI Summary

On June 6, 2024, Restaurant Brands International (RBI) announced the launch of a $1,000 million offering of First Lien Senior Secured Notes due 2029. The net proceeds will refinance a portion of the existing term loan B facility and cover related fees and expenses, with any remaining funds used for general corporate purposes. The notes will be fully guaranteed on a senior secured basis by RBI's subsidiaries. The offering is targeted at qualified institutional buyers under Rule 144A and investors outside the U.S. under Regulation S. The notes are not registered under the Securities Act and cannot be sold in the U.S. without registration or an exemption.

Positive

• RBI is issuing $1,000 million in First Lien Senior Secured Notes due 2029.
• Proceeds will refinance existing term loan B facility, improving financial flexibility.
• Notes are fully and unconditionally guaranteed by RBI's subsidiaries, ensuring robust backing.

Negative

• The notes are not registered under the Securities Act, limiting their marketability within the U.S.
• Funding primarily aimed at refinancing rather than new growth initiatives.
• Uncertainties around the exact allocation of remaining proceeds beyond refinancing and expenses.

Insights

Financial Analyst

Restaurant Brands International Inc. (RBI) has announced the launch of a substantial $1,000 million First Lien Senior Secured Notes offering, which will be used primarily for refinancing existing debt. From a financial perspective, this move is noteworthy as refinancing can help a company manage its debt more efficiently by potentially reducing interest costs and extending the maturity of liabilities. This can improve the company's liquidity position and cash flow stability in the short to medium term, which is positive for investors.

However, it's essential to analyze the terms and interest rates of these new notes compared to the existing term loan B facility. If the new notes have a lower interest rate, this could reduce RBI's financing costs, which is favorable. On the other hand, if the interest rate is higher, it could strain the financials over time. Additionally, the secured nature of these notes implies that they are backed by collateral, which may suggest a lower risk for investors compared to unsecured debt.

It's also worth noting that a portion of the proceeds will go towards general corporate purposes, which could signal potential investments or operational improvements. However, without specific details on the allocation, the impact remains speculative.

Legal Expert

This offering involves complex legal considerations, particularly due to the regulation under the Securities Act of 1933. The Notes will be offered to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S. This structure allows RBI to avoid the lengthy and costly process of registering the securities with the SEC, which is beneficial from a cost management perspective.

It's also important to highlight that these notes are fully and unconditionally guaranteed by Restaurant Brands International Limited Partnership and its wholly-owned subsidiaries. This guarantee structure adds an additional layer of security for the investors, making the notes more attractive. However, potential investors should be aware of the inherent risks involved with the jurisdictional legal implications and the possible legal ramifications in case of a default.

Given the stringent regulations and guarantees in place, this offering seems to be well-structured to protect investor interests and provide clarity on the legal standings of the notes.

TORONTO, June 6, 2024 /PRNewswire/ - Restaurant Brands International Inc. ("RBI") (TSX: QSR) (NYSE: QSR) (TSX: QSP), 1011778 B.C. Unlimited Liability Company (the "Issuer") and New Red Finance, Inc. (the "Co-Issuer" and, together with the Issuer, the "Issuers") announced today that the Issuers have launched an offering of $1,000 million in aggregate principal amount of First Lien Senior Secured Notes due 2029 (the "Notes").

RBI expects to use the net proceeds from the offering of the Notes to refinance a portion of the Issuers' existing term loan B facility and pay related fees and expenses, with the remainder, if any, to be used for general corporate purposes.

The Notes will be first lien senior secured obligations of the Issuers, guaranteed fully and unconditionally, and jointly and severally, on a senior secured basis by Restaurant Brands International Limited Partnership ("Holdings") and each of Holdings' wholly-owned subsidiaries that also guarantee the Issuers' obligations under the Issuers' existing senior secured credit facilities.

The Notes will be offered (i) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and (ii) outside the U.S. pursuant to Regulation S under the Securities Act. The Notes and the related guarantees have not been and will not be registered under the Securities Act and may not be offered or sold in the U.S. absent registration or an applicable exemption from the registration requirements under the Securities Act and applicable state securities laws.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About Restaurant Brands International

Restaurant Brands International Inc. is one of the world's largest quick service restaurant companies with over $40 billion in annual system-wide sales and over 30,000 restaurants in more than 120 countries and territories. RBI owns four of the world's most prominent and iconic quick service restaurant brands - TIM HORTONS®, BURGER KING®, POPEYES®, and FIREHOUSE SUBS®. These independently operated brands have been serving their respective guests, franchisees and communities for decades. Through its Restaurant Brands for Good framework, RBI is improving sustainable outcomes related to its food, the planet, and people and communities.

Forward-Looking Statements

This press release includes forward-looking statements, which are often identified by the words "may," "might," "believes," "thinks," "anticipates," "plans," "expects," "intends" or similar expressions and reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements include statements about RBI's expectations regarding the issuance of the Notes and the use of proceeds therefrom. The factors that could cause actual results to differ materially from RBI's expectations are detailed in filings of RBI with the U.S. Securities and Exchange Commission and on SEDAR+ in Canada, such as its annual and quarterly reports and current reports on Form 8-K, and include the following: (1) RBI's substantial indebtedness, which could adversely affect RBI's financial condition and prevent it from fulfilling its obligations; (2) global economic or other business conditions that may affect the desire or ability of RBI's customers to purchase RBI's products, such as inflationary pressures, high unemployment levels, declines in median income growth, consumer confidence and consumer discretionary spending and changes in consumer perceptions of dietary health and food safety; (3) RBI's relationship with, and the success of, RBI's franchisees and risks related to RBI's nearly fully franchised business model; (4) RBI's franchisees' financial stability and their ability to access and maintain the liquidity necessary to operate their businesses; (5) RBI's supply chain operations; (6) RBI's ownership and leasing of real estate; (7) the effectiveness of RBI's marketing, advertising and digital programs and franchisee support of these programs; (8) significant and rapid fluctuations in interest rates and in the currency exchange markets and the effectiveness of RBI's hedging activity; (9) RBI's ability to successfully implement RBI's domestic and international growth strategy for each of RBI's brands and risks related to RBI's international operations; (10) RBI's reliance on franchisees, including subfranchisees to accelerate restaurant growth; (11) unforeseen events such as pandemics; (12) the ability of the counterparties to RBI's credit facilities' and derivatives' to fulfill their commitments and/or obligations; (13) changes in applicable tax laws or interpretations thereof, and RBI's ability to accurately interpret and predict the impact of such changes or interpretations on RBI's financial condition and results; (14) evolving legislation and regulations in the area of franchise and labor and employment law; (15) RBI's ability to address environmental and social sustainability issues; (16) risks related to the conflict between Russia and Ukraine, and the conflict in the Middle East. Other than as required under U.S. federal securities laws or Canadian securities laws, RBI undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

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SOURCE Restaurant Brands International Inc.

FAQ

What is the purpose of RBI's $1,000 million notes offering?

RBI intends to use the proceeds to refinance a portion of its existing term loan B facility and cover related fees and expenses.

When are the notes issued by RBI due?

The First Lien Senior Secured Notes are due in 2029.

Who will guarantee the notes issued by RBI?

The notes will be fully and unconditionally guaranteed by RBI's subsidiaries.

Can the notes issued by RBI be sold in the U.S.?

No, the notes are not registered under the Securities Act and cannot be sold in the U.S. without registration or an exemption.