Zaxby's, a Georgia-based chain of quick-casual chicken-specialty restaurants, is marking its debut in whole-business securitization with a $985 million deal.
According to a presale report from Kroll Bond Rating Agency, Zaxby's will be earmarking its franchise fees, royalties, profits and other revenue into the new whole-biz master trust to secure the bond issuance, will will be used to refinance debt and provide general purpose funds for the 31-year-old company.
Headquartered in Athens, Ga., Zaxby's has 911 restaurants in 17 Southern U.S. states. It had system-wide sales totaling approximately $2.1 billion for the twelve months prior to the end of the first quarter. The Zaxby's system is approximately 84% franchised (representing 765 stores owned by 166 franchisees), according to KBRA.
The company has experienced compound annual growth rates of 5% with system-wide unit sales and 6% in same-store sales since 2010.
Zaxby's had limited impact from the COVID-19 outbreak, due to its strong performance in off-premise and drive-in sales that accounted for 60% of sales prior to the pandemic spread last year.
The capital stack of the transaction features a Class A-1 variable funding note totaling $75 million, a Class A-1-LR note tranche totaling $10 million and a Class A-2 notes tranche of $900 million in bonds. All of the notes carry preliminary BBB ratings from KBRA.
Barclays is the sole Structuring advisor and joint bookrunning manager. Goldman Sachs and Guggenheim Securities are serving as joint bookrunning managers.
