CKE Restaurants, the parent company of Carl’s Jr. and Hardee’s, sold $1.05 billion of bonds backed by franchise royalty and license payments Friday, according to a person familiar with the situation.
Barclays was the underwriter.
The transaction consisted of a single tranche of notes with a weighted average life of 6.6 years that were rated ‘BBB-‘ by Standard & Poor’s. The notes priced at 4.5%, above initial price talk that ranged from 4.0%-4.25%.
CKE owns or franchises 3,318 locations in 42 states and 28 foreign countries and US territories worldwide. It was taken private in a 2010 buyout by Apollo Global Management and filed to go public last year but later pulled the offering.
Such whole business securitizations are often used by private equity firms to refinance the debt of highly leveraged portfolio companies. In 2011, fast-food chain operator Church's Chicken, a portfolio company of Friedman Fleischer & Lowe, priced $220 million of bonds backed by franchise fees and store revenue. Barclays was the sole structuring adviser and bookrunning manager.
CKE is company rated B2 by Moody’s Investors Service and B- by Standard & Poor’s. It has around $855 million of long-term rated debt, including a $100 million first-lien senior secured revolving line of credit due in 2015, $532 million of second-lien senior secured notes due in 2018, and $233 million of senior unsecured PIK toggle notes due in 2016, according to Moody’s.