Yum! Brands, Inc. to Offer $4.6 Billion in New Debt
May 18 2016 - 5:01PM
Business Wire
Funds to Support Return of Capital to
Shareholders
Yum! Brands, Inc. (NYSE: YUM) (the “Company”) today announced
that it is offering $4.6 billion of new debt to optimize its
capital structure in advance of the planned separation of its China
business.
The financing is yet another milestone in the Company’s
previously communicated plan of targeting total companywide
leverage of approximately 5.0X EBITDA and returning approximately
$6.2 billion of capital to shareholders prior to the separation of
its China business, which is on track to be completed by the end of
2016.
The new debt is intended to fund the return of capital to
shareholders, repay borrowings under the Company’s existing
revolving credit facility, pay associated transaction fees and
expenses, and support general corporate purposes. This debt will be
issued by certain subsidiaries that operate the Company’s KFC,
Pizza Hut and Taco Bell businesses.
The new debt will be comprised of a new Senior Secured Credit
Facility (including an $800 million Term Loan A and a $1.5 billion
Term Loan B) and $2.3 billion of Senior Unsecured Notes.
Additionally, a $1 billion revolving credit facility will replace
the Company’s existing revolving credit facility (collectively, the
“Financing”). Yum! Brands’ legacy publicly-traded notes will remain
in place as unsecured obligations of the Company.
A bank meeting for the Senior Secured Credit Facility is
scheduled to take place in New York on Monday, May 23, 2016.
The Financing is subject to market and other conditions and is
anticipated to close in the second quarter of 2016. However, there
can be no assurance that the Company will be able to successfully
complete the Financing, on the terms described above, or at
all.
This release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of,
the Senior Unsecured Notes in any state or other jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state or other jurisdiction. The Senior Unsecured Notes will be
offered and sold to qualified institutional buyers in the United
States in reliance on Rule 144A under the Securities Act of 1933,
as amended (the “Securities Act”) and to non-U.S. persons in
offshore transactions outside the United States in accordance with
Regulation S under the Securities Act. The Senior Unsecured Notes
will not be registered under the Securities Act or any state
securities laws, and may not be offered or sold in the United
States or to U.S. persons absent registration or an applicable
exemption from the registration requirements.
Yum! Brands, Inc., based in Louisville, Kentucky, has nearly
43,000 restaurants in more than 130 countries and territories. Yum!
is ranked #228 on the Fortune 500 List with revenues of over $13
billion in 2015 and is one of the Aon Hewitt Top Companies for
Leaders in North America. The Company's restaurant brands - KFC,
Pizza Hut and Taco Bell - are the global leaders of the chicken,
pizza and Mexican-style food categories. Worldwide, the Yum! Brands
system opens over six new restaurants per day on average, making it
a leader in global retail development.
This announcement may contain “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. We intend all
forward-looking statements to be covered by the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally can be identified by the fact
that they do not relate strictly to historical or current facts and
by the use of forward-looking words such as “expect,”
“expectation,” “believe,” “anticipate,” “may,” “could,” “intend,”
“belief,” “plan,” “estimate,” “target,” “predict,” “likely,”
“will,” “should,” “forecast,” “outlook” or similar terminology.
These statements are based on current estimates and assumptions
made by us in light of our experience and perception of historical
trends, current conditions and expected future developments, as
well as other factors that we believe are appropriate and
reasonable under the circumstances, but there can be no assurance
that such estimates and assumptions will prove to be correct.
Forward-looking statements reflect our current expectations,
estimates or projections concerning future results or events,
including, without limitation, statements regarding the intended
capital return to shareholders as well as the related borrowing
required to fund such capital return, the planned separation of the
Yum! Brands and Yum! China businesses, the timing of any such
separation, the future earnings and performance as well as capital
structure of Yum! Brands, Inc. or any of its businesses, including
the Yum! Brands and Yum! China businesses on a standalone basis if
the separation is completed. Forward-looking statements are not
guarantees of performance and are inherently subject to known and
unknown risks, uncertainties and assumptions that are difficult to
predict and could cause our actual results to differ materially
from those indicated by those statements. We cannot assure you that
any of our expectations, estimates or projections will be achieved.
The forward-looking statements included in this announcement are
only made as of the date of this announcement and we disclaim any
obligation to publicly update any forward-looking statement to
reflect subsequent events or circumstances. Numerous factors could
cause our actual results and events to differ materially from those
expressed or implied by forward-looking statements, including,
without limitation: whether we are able to return capital to
shareholders at the times and in the amounts currently anticipated,
if at all, as well as the corresponding costs of borrowing to fund
such capital return as well as other costs; whether the separation
of the Yum! Brands and Yum! China businesses is completed, as
expected or at all, and the timing of any such separation; whether
the operational and strategic benefits of the separation can be
achieved; whether the costs and expenses of the separation can be
controlled within expectations, including potential tax costs; as
well as other risks. In addition, other risks and uncertainties not
presently known to us or that we currently believe to be immaterial
could affect the accuracy of any such forward-looking statements.
All forward-looking statements should be evaluated with the
understanding of their inherent uncertainty. You should consult our
filings with the Securities and Exchange Commission (including the
information set forth under the captions “Risk Factors” and
“Forward-Looking Statements” in our Annual Report or Form 10-K) for
additional detail about factors that could affect our financial and
other results.
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version on businesswire.com: http://www.businesswire.com/news/home/20160518006516/en/
Yum! Brands, Inc.Analysts are invited to contact:Donny Lau,
888-298-6986Senior Director, Investor Relations & Corporate
StrategyorElizabeth Grenfell, 888-298-6986Director, Investor
RelationsorMembers of the media are invited to contact:Virginia
Ferguson, 502-874-8200Director, Public Relations
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