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Restaurant Brands International Inc. Announces Pricing of Financing Transactions

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Restaurant Brands International (RBI) has announced the pricing of $1.2 billion in 6.125% Senior Secured Notes due 2029, an increase of $200 million from the initially planned offering. The proceeds will refinance a portion of RBI's Term Loan B Facility, which has been reduced to $4.75 billion and repriced to a lower interest rate of SOFR plus 1.75%, down from SOFR plus 2.25%. The refinancing is expected to be net leverage neutral and yield annual net interest savings. The repackaged term loan maintains its September 2030 maturity date with no other significant term changes.

The Notes were offered to qualified institutional buyers and internationally under Regulation S. The Notes are senior secured and guaranteed by RBI's subsidiary entities. The offering is set to close on or around June 17, 2024, subject to standard closing conditions.

Positive
  • Issuance of $1.2 billion Senior Secured Notes, reflecting a $200 million upsize.
  • Repricing of Term Loan B Facility to a lower interest rate (SOFR +1.75%).
  • Expected annual net interest savings from refinancing.
  • Maintaining net leverage neutrality.
  • Senior Secured Notes guaranteed by RBI's wholly-owned subsidiaries.
Negative
  • Issuance of high-interest debt (6.125%) potentially adding financial burden.
  • Downsized Term Loan B Facility, reducing liquidity by $1.162 billion.

Restaurant Brands International Inc. (RBI) has undertaken significant financial transactions, including the issuance of $1.2 billion in First Lien Senior Secured Notes at an interest rate of 6.125%, maturing in 2029. The intention behind this move is to refinance a portion of the existing Term Loan B Facility due in 2030, which will reduce the outstanding principal from $5.912 billion to $4.750 billion and lower the interest spread from SOFR plus 2.25% to SOFR plus 1.75%.

The repricing and refinancing aim to be leverage-neutral, implying that they should not alter the company's debt-to-equity ratio. However, RBI is projected to benefit from annualized net interest savings, which can positively impact profitability margins and free up cash flow for other corporate purposes. For investors, this is a positive indicator of management's efficient capital allocation and cost-saving strategies, potentially leading to improved earnings in the medium to long term.

Furthermore, issuing secured notes signals that the company is confident in its ability to meet its debt obligations, as these are typically backed by collateral. Such financial maneuvers are common in the industry, particularly for companies with substantial operational scales like RBI. Investors should monitor how these savings translate into real financial performance over the coming quarters and consider the intrinsic risk of rising interest rates impacting future refinancing strategies.

RBI Raises $1.2B of 6.125% Senior Secured Notes due 2029 to Refinance a Portion of its Existing Term Loan B Facility
RBI to Reprice its Existing Term Loan B Facility due September 2030 from SOFR plus 2.25% to SOFR plus 1.75%
Transactions are Expected to be Net Leverage Neutral and Expected to Result in Annualized Net Interest Savings

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 priced an offering of $1,200 million in aggregate principal amount of 6.125% First Lien Senior Secured Notes due 2029 (the "Notes"), reflecting an upsize of $200 million over the previously announced offering size. The closing of the offering of the Notes is expected to occur on or about June 17, 2024, subject to customary closing conditions.

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 due in September 2030 (the "Term Loan B Facility"), pay related fees and expenses and 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 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.

RBI also announced today that it will be repricing and downsizing its Term Loan B Facility, from $5,912 million at Adjusted Term SOFR Rate plus 2.25% to $4,750 million at Adjusted Term SOFR Rate plus 1.75%, after giving effect to the anticipated use of the net proceeds from the offering of the Notes. There are no changes to the maturity of the Term Loan B Facility following this repricing and all other terms are substantially unchanged.

These transactions are expected to be approximately neutral to net leverage and to result in annualized net interest savings.  

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 Inc.
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, as well as RBI's expectations regarding the repricing and downsizing of its Term Loan B facility, which repricing information is subject to final allocations to and confirmations from the lenders under such facility. 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 are the terms of Restaurant Brands International's new senior secured notes?

RBI's new senior secured notes are $1.2 billion in 6.125% notes due 2029.

How will RBI use the proceeds from the senior secured notes offering?

RBI will use the proceeds to refinance a portion of its existing Term Loan B Facility.

What changes are being made to RBI's Term Loan B Facility?

RBI's Term Loan B Facility is being reduced to $4.75 billion and repriced to SOFR plus 1.75%.

When is the closing date for RBI's senior secured notes offering?

The closing of the offering is expected to occur on or about June 17, 2024.

What is the expected financial outcome of RBI's refinancing transactions?

The transactions are expected to be net leverage neutral and result in annual net interest savings.

Restaurant Brands International Inc.

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