Guggenheim Securities is structuring a $300 million whole business securitization for Hooters of America.

The deal, HOA Funding, is backed by all existing and future franchise agreements, company-operated restaurants and related intellectual property, according to Kroll Bond Ratings. The transaction will include all of the issuer’s 415 restaurants, located in 42 states, Washington D.C. and 24 countries and territories.

Approximately 87.0% of annualized sales are derived from locations within the U.S., while approximately 12.9% of annualized sales are from locations outside of the U.S.

Hooters plans to use the proceeds from the transaction to refinance existing debt.

KBRA  has assigned preliminary ratings of ‘BBB’ to the class A-1 and A-2 notes issued under the capital structure.  The $25 million class A-1 notes have an anticipated repayment date f August 2019 and the $275 million class A2 notes have an anticipated repayment date of August 2021. The notes have a legal final maturity date of August 2044.

Whole business securitizations are often used by private equity firms to refinance the debt of highly leveraged portfolio companies. In March 2013, 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.  Barclays was the underwriter.

Hooters joins a growing list of first time issuer’s to come to market this month that includes a first equipment lease ABS deal for Dell Financial Services and a prime auto loan securitization deal by first time issuer, Gateway One Lending & Finance.

 

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