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

Rhea-AI Summary

Restaurant Brands International Inc. (QSR) has announced the pricing of a $500 million offering of 5.625% First Lien Senior Secured Notes due 2029. The proceeds will be used to redeem the outstanding 5.750% First Lien Senior Secured Notes due 2025. This refinancing is expected to be neutral to net leverage and accretive to interest expense. The new notes will be guaranteed by Restaurant Brands International Partnership and its wholly-owned subsidiaries. The offering is expected to close around September 13, 2024, subject to customary conditions. The notes are being offered to qualified institutional buyers and outside the U.S. under Regulation S, and have not been registered under the Securities Act.

Positive

• Refinancing expected to be accretive to interest expense
• Maintaining neutral net leverage position
• Successful pricing of $500 million in new notes

Negative

• None.

Insights

Financial Analyst

RBI's new $500 million note offering at 5.625% interest to replace existing 5.75% notes is a strategic financial move. This refinancing will be accretive to interest expense, potentially improving profitability. The company's ability to secure a lower interest rate suggests strong market confidence in its creditworthiness.

The neutral impact on net leverage indicates RBI is maintaining its current debt levels, focusing on optimizing its capital structure rather than deleveraging. This approach aligns with a strategy of balancing financial flexibility and shareholder returns. Investors should monitor how RBI utilizes this improved cost structure to drive growth or enhance shareholder value in the coming quarters.

Market Research Analyst

This refinancing move by RBI demonstrates the company's proactive approach to capital management in a rising interest rate environment. By locking in a lower rate until 2029, RBI is hedging against potential future rate hikes, which could provide a competitive advantage in the fast-food industry where margins are often tight.

The market's willingness to accept these new notes at a lower yield suggests positive sentiment towards RBI's financial health and future prospects. This could potentially lead to improved investor confidence and stock performance. However, it's important to consider how RBI plans to leverage this financial optimization to drive operational improvements and market share growth in its competitive quick-service restaurant segment.

TORONTO, Sept. 3, 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 priced an offering of $500 million in aggregate principal amount of 5.625% First Lien Senior Secured Notes due 2029 (the "Notes"). The closing of the offering of the Notes is expected to occur on or about September 13, 2024, subject to customary closing conditions.

RBI expects to use the proceeds from the offering of the Notes, together with cash on hand, to redeem in full the Issuers' outstanding 5.750% First Lien Senior Secured Notes due 2025 (the "2025 Notes") and pay related fees and expenses. The Issuers expect to redeem $500 million in aggregate principal amount of 2025 Notes. This press release does not constitute a notice of redemption with respect to the 2025 Notes. The combined effect of the offering of the Notes and the redemption of the 2025 Notes will be neutral to net leverage and accretive to interest expense.

The Notes will be first lien senior secured obligations of the Issuers, guaranteed fully and unconditionally, and jointly and severally, on a first lien 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 were 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; and (17) softening in the consumer environment. 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 interest rate on QSR's newly priced First Lien Senior Secured Notes?

The newly priced First Lien Senior Secured Notes have an interest rate of 5.625%.

When are QSR's new First Lien Senior Secured Notes due?

The new First Lien Senior Secured Notes are due in 2029.

How much is the aggregate principal amount of QSR's new notes offering?

The aggregate principal amount of the new notes offering is $500 million.

What will QSR use the proceeds from the new notes offering for?

QSR will use the proceeds to redeem in full the outstanding 5.750% First Lien Senior Secured Notes due 2025.

When is the expected closing date for QSR's new notes offering?

The closing of the new notes offering is expected to occur on or about September 13, 2024, subject to customary closing conditions.