Securitization investors are about to fill up on another restaurant-related whole business securitization, as Cajun Global, which operates restaurant brands including Church's and Popeyes Louisiana Kitchen, brings a $363.1 million offering to market.
The transaction, Cajun Global 2025-2, which will issue notes through four tranches, is the fifth master issuer securitization from Cajun Operating Company, which will sell notes to investors through four tranches of notes, according to KBRA.
Proceeds from the raised capital will repay several tranches of notes from the series 2021-1 deal, plus general corporate purposes, among other expenses.
Barclays Capital is acting as sole structuring advisor and the sole bookrunning
manager, according to KBRA, and the deal is expected to close on November 28.
All the series of notes—class A1 LR, A1 VFN, A2 and the class M notes—have a November 2055 final maturity date. Anticipated repayment dates are much earlier, with class A1 VFN notes coming due in May 2029, and the A2 and class M notes are expected to repay in May 2031, KBRA said.
KBRA assigns BBB to the A1 LR, A1 VFN and A2 notes, and BB- to the class M notes. The rating agency also affirmed ratings on existing outstanding notes from the 2025-1 and 2021-1 series, KBRA said.
The collateral includes existing and future domestic and international franchise agreements, plus the related royalties, fees and profits from restaurants that Cajun Global operates, and franchisee leases and intellectual property. The transaction is secured by revenue from 1,449 restaurant locations in 26 states, KBRA said. Primarily, however, the Cajun Global's gets its cash flows from top-line royalty payments from the system's franchise locations, the rating agency said.
That bodes well for the transaction because those payments are generally less volatile than other income streams, including profits from company-owned and operated locations. Cajun Global has leverage of about 5.6x, while the total debt capacity, which includes the subordinate notes, is 6.3x.
Senior notes have an interest reserve account that will cover about three months of class A note interest payments.
Cajun also benefits from subordination, as the series 2025-1 class M notes are subordinated to all the class A notes. Should the triggers be breached, interest and principal that are due on the class M notes will be paid after those amounts are paid on the class A notes.
