LOUISVILLE - Yum! Brands, Inc. (NYSE: NYSE:YUM), the parent company of fast-food giants KFC, Pizza Hut, and Taco Bell, has announced the completion of a refinancing deal involving its subsidiaries.
The refinancing includes a new $500 million term loan A and a $1.50 billion revolving credit facility, both set to mature on April 26, 2029, with certain conditions attached regarding the company's other outstanding debts.
The refinanced facilities replace approximately $713 million in existing term loan A and $1.25 billion in revolving facilities. The new arrangements do not introduce additional net new debt to Yum! Brands' balance sheet, maintaining the total bank credit facility at approximately $2.00 billion, excluding the existing $1.46 billion term loan B.
Interest rates for the new term loan A and revolving credit facility remain unchanged from the previous arrangements. Borrowers can opt for interest rates based on Adjusted Term SOFR or the base rate, with a spread determined by the borrower's total leverage ratio. The base rate is the highest of the current Prime Rate, federal funds rate plus 0.5%, or one month Adjusted Term SOFR plus 1.0%.
The amortization of the term loan A is set at 2.5% per annum for the second and third years after closing, increasing to 5.0% per annum for the fourth and fifth years. The proceeds from the issuance are intended for repaying the existing facilities, covering transaction fees and expenses, and for general corporate purposes.
Yum! Brands operates over 59,000 restaurants in more than 155 countries and territories. Its brands, including KFC, Taco Bell, Pizza Hut, and the Habit Burger Grill, hold leading positions in their respective food categories. The company has been recognized for its sustainability efforts, diversity, and corporate responsibility.
This financial move comes amid a period of accolades for Yum! Brands, as the company continues to be featured on prominent indexes and lists for its corporate practices. This statement is based on a press release issued by Yum! Brands, Inc.
InvestingPro Insights
As Yum! Brands, Inc. (NYSE: YUM) fortifies its financial structure with a recent refinancing deal, the company's market performance and valuation metrics provide additional context for investors. According to InvestingPro, Yum! Brands holds a substantial market capitalization of $39.93 billion USD, reflecting its significant presence in the global fast-food industry.
The company's P/E ratio, a key indicator of its valuation, stands at 25.06, suggesting a premium valuation relative to current earnings. This is further supported by the adjusted P/E ratio for the last twelve months as of Q4 2023, which is at 24.18.
While this might seem high, it is important to note that Yum! Brands has demonstrated a consistent ability to maintain and grow dividends, having increased them for 6 consecutive years and maintained payments for 21 consecutive years—points that are underscored by InvestingPro Tips.
Investors looking for stability may also find solace in Yum! Brands' low price volatility, as highlighted by another InvestingPro Tip. Moreover, the company's revenue growth over the last twelve months as of Q4 2023 was 3.42%, indicating a steady upward trajectory in its financial performance. While revenue growth in Q4 2023 was more modest at 0.84%, the company's overall financial health appears robust, with a gross profit margin of 49.42% over the same period.
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