EUR 407.14 For Business Accounts Only

BURGER KING FRANCE - New Issue Comment

TRANSACTION SUMMARY

Burger King France (‘BK France’) is planning the acquisition of 28 Burger King and Quick franchises in France from certain of its shareholders’ affiliates. Altogether, these restaurants generated LTM sales and EBITDA of €80m and €10m respectively. A portion of the €93m acquisition cost will be funded by a €50m tap of BK France’s existing €250m senior secured FRN due 2023. The remainder will be financed through a €50m equity injection into BK France by parent entity NewCo GB, which is itself funded by €210m of new senior PIK toggle notes due 2022. Proceeds from the PIK toggle notes will also be used to repay €132m of holdco debt. This is a way for shareholder Groupe Bertrand to centralize its Burger King and Quick operations within the same perimeter while refinancing holding company debt (outside the restricted group of Burger King France).

WE MAINTAIN OUR POSITIVE CREDIT VIEW

In our view, the acquisition of the 28 Burger King and Quick franchises by Burger King France makes sense, especially as it is broadly neutral from a credit perspective given the €50m equity injection. This is also in line with the group’s strategy to move away from pure franchise agreements. Pro forma of the acquisition, and based
on management’s reported run-rate EBITDA of €111m, net reported leverage will increase by 0.1x to 4.4x at the Op- Co level (Burger King France SAS) and by 0.5x to 6.1x at the HoldCo level (NewCo GB).