CANTON, Mass. – Dunkin’ Brands Group, Inc. , the parent company of Dunkin’ Donuts (DD) and Baskin-Robbins (BR), announced on Monday that it has completed its refinancing as planned, with the placement by its special purpose subsidiary (the “Master Issuer”) of a $2.6 billion securitized debt facility.
The new securitized debt facility replaces the Company’s $1.9 billion senior secured credit facility.
The securitized debt facility includes $2.5 billion Class A-2 Senior Secured Notes (“Notes”), which consist of two tranches with anticipated repayment dates of four years ($750 million) and seven years ($1.75 billion), respectively.
The Notes will bear interest at a rate of 3.262 percent per annum for the four year tranche and 3.980 percent per annum for the seven year tranche, resulting in a weighted-average effective interest rate of 3.765 percent per annum, payable quarterly. As a result, the Company expects its 2015 annual interest expense to be approximately $96.5 million.
The Master Issuer also entered into a purchase agreement for the issuance of up to $100 million of Series 2015-1 Variable Funding Senior Notes, Class A-1 (the “VFN”), which will allow the Master Issuer to borrow amounts from time-to-time on a revolving basis and issue letters of credit.
“We are very pleased to complete the refinancing of our debt at what we believe is an attractive rate for the new securitized debt structure, which provides us with the stability of fixed rate interest over the next several years.
We plan to use the net proceeds, after the repayment of our senior secured credit facility and the payment of fees and expenses associated with the transaction, of approximately $615 million, for general corporate purposes, including to return capital to shareholders through future share repurchases,” said Nigel Travis, Chairman and CEO, Dunkin’ Brands Group, Inc.
“The new debt structure leverages our business model’s ability to generate strong cash flow and increases our financial flexibility.
We are adjusting our adjusted earnings per share guidance that we provided on December 18, 2014, for the anticipated impact of this transaction and the expected use of proceeds on interest expense and shares outstanding. This results in amended guidance from $1.88 to $1.91 to $1.83 to $1.87,” said Paul Carbone, Chief Financial Officer, Dunkin’ Brands Group, Inc.
The Master Issuer and its subsidiaries hold or have the right to receive payments on substantially all of the Company’s revenue-generating assets and will use cash flows generated from these assets to make interest and principal payments on the Notes.
The Company also announced today that its Board of Directors authorized a new share repurchase program for up to an aggregate of $700 million of its outstanding common stock. The authorization is valid for a period of two years.
This press release does not constitute an offer to sell or the solicitation of an offer to buy the Notes or any other security.
The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state 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 securities laws.
Conference Call
Dunkin’ Brands will be holding a conference call on Wednesday, January 28, 2015, at 10:00 am ET to discuss this announcement. Paul Carbone, Chief Financial Officer, will host the call. The dial-in number is (866) 393-1607 or (914) 495-8556, conference number 74201193.
Dunkin’ Brands will broadcast the conference call live over the Internet at http://investor.dunkinbrands.com. A replay of the conference call will be available on the Company’s website at http://investor.dunkinbrands.com.
