Hooters of America will refinance $345 million of bonds backed by all existing and future franchise agreements, company-operated restaurants and related intellectual property, according to Kroll Bond Ratings.
HOA Funding 2015-1 will refinance $25 million class A1 notes, rated ‘BBB’ and $275 million class A2 notes’, rated ‘BBB’, which were issued last July; as well as issue an additional $25 million of ‘BBB’ rated, class A2 notes and $20 million of ‘BB’ rated, class B subordinate notes. The notes are structured with an anticipated repayment date of 2021 and a final maturity date of August 2044.
The transaction will include all of the issuer’s 416 restaurants, located in 41 states, Washington D.C. and 24 countries and territories. Chicken wings are the sponsor's top-selling menu items, representing approximately 32.0% of Hooter's sales during 2014. The average annualized gross sales per store totals approximately $2.4 million for domestic locations, while international locations average $1.8 million in annualized sales.Whole business securitizations are often used by private equity firms to refinance the debt of highly leveraged portfolio companies. Hooter's bond refinancing is expected to strengthen the company's coverage ratios, while also providing a distribution to shareholders, according to the Kroll presale report.