ServiceMaster Brands, a restoration and cleaning services firm for commercial and residential clients, is sponsoring a first-time securitization of fees and other revenues received from nearly 2,400 of its franchisees in the U.S. and Canada.
According to ratings agency presale reports, ServiceMaster Funding LLC 2020-1 is a $725 million bond offering that will be used to repay the outstanding debt for ServiceMaster, consisting of a $675 million bridge loan utilized by parent company Roark Capital Group that acquired ServiceMaster last month.
Roark Capital owns several prominent franchise operations that have frequently utilized whole-business securitizations similar to the ServiceMaster 2020-1 deal.
Under terms of the deal, operational revenue and profits from the 2,392 franchise operations under ServiceMaster Brands will be directed to investors via the newly established master trust. ServiceMaster’s underlying brand names include ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec, all of which combined for $2.6 billion in systemwide sales for the 12 months prior to the third quarter of 2020.
The proposed transaction will include $225 million in Class A-2-1 notes and $475 million in Class A-2-II notes; in addition, ServiceMaster will issue $50 million in Class A-1 variable funding notes.
S&P Global Ratings has assigned preliminary BBB- ratings to each of the notes, according to a report issued over the weekend. Kroll Bond Rating Agency issued an early BBB rating on the notes last week.
The series issuance will result in a leverage of approximately 7.6x, according to presale reports from S&P Global and Kroll.
