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Driven Brands offering second whole-biz securitization of 2020

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Automotive services chain operator Driven Brands is pursuing its next whole-business securitization, despite a recent sales decline among its franchise stores due to slowing economic conditions related to the pandemic.

According to Kroll Bond Rating Agency, Driven Brands – which owns auto service and maintenance shops like Maaco, Meineke and Take 5 oil change centers – is looking to price $450 million of Series 2020-2 bonds from its Drive Brand Funding and Driven Brands Canada Funding Corp. master trust. The issuance would be the seventh for the operator since 2015.

The notes will be included in a single Class A-2 tranche with a BBB preliminary rating from Kroll Bond Rating Agency – similar to the ratings of the company’s six prior transactions. The notes will be pari passu with notes from Driven Brands’ prior transactions.

Driven Brands is the largest automotive services company in North America, according to Kroll, and has 3,229 locations (all but 502 of which are franchised). Other brands include ABRA, CARStar, Fix Auto USA, Uniban, 1800-Radiator and PH Vitres D’Autos.

About 20% of the store locations are in Canada.

Prior to Driven Brands’ July 2020 issuance of the Series 2020-1 notes, the company had $3.4 billion in revenue for the 12 months prior to March 28, producing cash flow of $254.8 million.

Those figures have since declined slightly, due to declining same-store sales performance during the initial months of the coronavirus outbreak and business shutdowns conducted in both countries. Kroll noted that all Driven Brand-owned locations, considered essential businesses, remained open during local, state and provincial lockdown periods.

The company’s debt-to-securitized cash flow will slightly increase to 6.2x from 6.1x this summer, according to Kroll.

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Whole business securitization Esoteric ABS ABS Coronavirus
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