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Church’s Chicken closes $245M debt refinancing

Church’s Chicken has refinanced its debt with a new $245 million asset-backed securitization, the company said Monday.

The Atlanta-based, 1,700-unit quick-service operation, which is owned by private-equity firm Friedman Fleischer & Lowe, said proceeds from the securitization were used to repay outstanding balances from existing credit facilities, and to pay related fees and expenses and a dividend to shareholders. The debt refinancing includes $220 million of senior secured notes, which have a maturity date of February 2018, as well as $25 million in senior secured revolving notes.

“This new financing structure provides Church’s Chicken with greater financial flexibility and a significantly lower cost of capital, which better positions us to execute on our strategy and achieve our growth objectives,” Mel Deane, chief executive of Church’s Chicken, said in a statement.

Church’s Chicken did not return a request to comment on terms of the deal, and none were outlined in its statement.

The company did note that the deal is the first whole-business securitization since 2007. Securitization deals allow companies to borrow large amounts of money for favorable terms through the offering of a new security class, which many times in foodservice includes future franchise royalty payments. In 2006 and 2007, IHOP Corp., Wendy’s International Inc. and Dunkin’ Brands used franchise royalty securitization to help finance their acquisitions of or sales to Applebee’s International Inc., Arby’s Restaurant Group and a private-equity group, respectively.

The securitization at Church’s Chicken was arranged by Barclays Capital.

Contact Sarah Lockyer at [email protected]

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