YUM! Brands Announces Intention to Refinance Certain Notes Issued Pursuant to its Existing Securitization Financing Facility

Rhea-AI Summary

YUM! Brands announced plans to refinance its Series 2016-1 Class A-2-II and Series 2018-1 Class A-2-I Fixed Rate Senior Secured Notes, which total approximately $2.853 billion. The refinancing will introduce $2 billion in New Notes, aimed at repaying existing notes, covering transaction expenses, supporting general corporate purposes, and potentially returning capital to shareholders. The New Notes will be available to qualified institutional buyers under the Securities Act but will remain unregistered. No assurance is provided regarding refinancing timing or completion.

Positive

• Intended refinancing to streamline debt with $2 billion in New Notes.
• Potential use of proceeds for capital return to shareholders.

Negative

• No assurance on refinancing transaction timing or completion.
• Existing notes total approximately $2.853 billion, indicating significant debt.

YUM! Brands, Inc. (NYSE: YUM) (the “Company”) today announced its intention to refinance its Series 2016-1 Notes Fixed Rate Senior Secured Notes, Class A-2-II (the “Series 2016-1 Class A-2-II Notes”) and Series 2018-1 Fixed Rate Senior Secured Notes, Class A-2-I (the “Series 2018-1 Class A-2-I Notes”), issued by a wholly-owned subsidiary of Taco Bell Corp., pursuant to the Company’s securitization financing facility (the “Securitization Financing”) securitizing Taco Bell's U.S. franchise royalties.

As of June 30, 2021, the balances of the Series 2016-1 Class A-2-II Notes, the Series 2016-1 Class A-2-III Notes (the “Series 2016-1 Class A-2-III Notes”), the Series 2018-1 Class A-2-I Notes and the Series 2018-1 Class A-2-II Fixed Rate Senior Secured Notes (the “Series 2018-1 Class A-2-II Notes”) issued pursuant to the Securitization Financing were approximately $480 million, $960 million, $804 million and $609 million, respectively.

The Company intends to replace the Series 2016-1 Class A-2-II Notes and the Series 2018-1 Class A-2-I Notes with a new series of notes issued pursuant to the Securitization Financing, expected to be comprised of $2 billion of senior term notes (the “New Notes”). The Company intends to use the net proceeds of the New Notes for repayment of the Series 2016-1 Class A-2-II Notes and the Series 2018-1 Class A-2-I Notes, certain transaction-related expenses, for general corporate purposes and may also be used to return capital to shareholders of the Company. The Series 2016-1 Class A-2-III Notes and Series 2018-1 Class A-2-II Notes will remain outstanding.

There can be no assurance regarding the timing of a refinancing transaction, the interest rate at which the Series 2016-1 Class A-2-II Notes and the Series 2018-1 Class A-2-I Notes would be refinanced, or that a refinancing transaction will be completed.

The New Notes are being sold to qualified institutional buyers in the United States in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons outside the United States in accordance with Regulation S under the Securities Act. The New Notes have not been, and will not be, registered under the Securities Act, any state or other jurisdictions securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state or other jurisdiction’s securities laws.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the New Notes or any other security. Any offers of the New Notes will be made only by means of a private offering circular.

Category: Financial

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805006154/en/

FAQ

What are YUM's plans for refinancing its Series 2016-1 Notes?

YUM intends to refinance its Series 2016-1 Class A-2-II and Series 2018-1 Class A-2-I Notes with $2 billion in New Notes.

How much debt does YUM plan to refinance?

YUM plans to refinance approximately $2.853 billion in total debt from existing notes.

What will the proceeds from the New Notes be used for?

Proceeds will be used to repay existing notes, cover transaction expenses, and for general corporate purposes, including potential capital returns to shareholders.

Who can purchase the New Notes issued by YUM?

The New Notes will be sold to qualified institutional buyers under Rule 144A of the Securities Act.

Is there a risk regarding the refinancing of YUM's notes?

Yes, there is no assurance regarding the timing or completion of the refinancing transaction.