Cajun Operating is preparing its fourth securitization from its master trust, raising $100 million from the Cajun Global 2025-1 series of notes.
The transaction will issue two classes. The A1 tranche of variable funding notes, where the principal balance could decrease—or increase—periodically. They will pay a variable rate, according to Kroll Bond Rating Agency. There is also an A2 tranche.
Both tranches have a February 2032 anticipated repayment date, with a final maturity date of February 2055, KBRA said. KBRA assigned BBB ratings to both tranches, according to its presale report.
Notes will be repaid primarily from a stream of royalties and fees from franchise agreements, leases and intellectual property, plus profits from company-operated restaurants, KBRA said. Cajun manages and operates the Church's and Texas Chicken brands and saw $1.6 billion in systemwide sales for the 12 months ending in Q3 2024. The franchise segment, with 1,346 restaurant locations in the pool, accounts for about 73% of the deal's securitization collections, according to KBRA.
Barclays Capital is the sole structuring advisor and book-running manager on the deal, which is slated to close at the end of February, KBRA said.
Cajun Global 2025-1's capital structure includes an interest reserve account for the senior notes, which covers about three months of interest payments.
The trust benefits from several triggers dependent on various debt service coverage ratios (DSCR), to help maintain the notes' credit until full repayment, KBRA said. A cash trapping DSCR threshold, for instance, will deposit all excess cashflows into the deal's cash trap reserve account. These payments will be triggered if, on any quarterly date, the DSCR is less than 1.75x, in which case 50% of all the excess cashflow will be deposited. If that DSCR is less than 1.50x, then all the excess cashflow will be deposited, the rating agency said.
Also, the rapid amortization event calls for all collections, plus sums in the cash trap reserve account to pay senior expenses, interest and principal on the notes of the DSCR is less than 1.20x on any quarterly payment date, KBRA said.
