Yum! Brands, Inc. Completes Refinancing of Senior Secured Credit Facilities

Yum! Brands, Inc. (NYSE: YUM) (the “Company”) today announced that certain subsidiaries that operate the Company’s KFC, Pizza Hut and Taco Bell businesses have completed the refinancing of the existing approximately $1.9 billion term loan B facility, approximately $431 million term loan A facility and approximately $1.0 billion revolving facility (the “Existing Facilities”) 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”) pursuant to an amendment to the underlying credit agreement (the “Amendment”).

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 B Loan 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 underlying credit agreement remain unchanged.

Net proceeds from the issuance will be used to repay the Existing Facilities, to pay associated transaction fees and expenses, and for general corporate purposes.

Yum! Brands, Inc., based in Louisville, Kentucky, has over 50,000 restaurants in more than 150 countries and territories primarily operating the Company’s KFC, Pizza Hut, and Taco Bell brands – global leaders of the chicken, pizza, and Mexican-style food categories. The Company’s family of brands also includes The Habit Burger Grill, a fast-casual restaurant concept specializing in made-to-order chargrilled burgers, sandwiches and more. Yum! Brands was included on the 2021 Bloomberg Gender-Index and in 2020, Yum! Brands was named to the Dow Jones Sustainability Index North America and was ranked among the top 100 Best Corporate Citizens by 3BL Media.

Category: Financial

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