Kroll Bond Rating Agency Assigns Preliminary Ratings to FOCUS Brands Funding LLC, Carvel Funding LLC, McAlister’s Funding LLC – Series 2017-1 Senior Secured Notes

NEW YORK--()--Kroll Bond Rating Agency (KBRA) announces the preliminary ratings to three note classes of FOCUS Brands Funding LLC, Carvel Funding LLC, McAlister’s Funding LLC, a whole business securitization.

Focus Brands Inc. (“FOCUS”, or “the Company”) is the franchisor and operator of branded locations under the brands Auntie Anne’s, Carvel, Cinnabon, McAlister’s Deli, Moe’s Southwest Grill and Schlotzsky’s. FOCUS will contribute many of its revenue-generating assets to FOCUS Brands Funding LLC, Carvel Funding LLC and McAlister’s Funding LLC as collateral for the offered notes. The collateral consists of certain of its existing and future franchise and development agreements, existing and future company-operated location royalties, licensing fees, vendor payments and fees, intellectual property, and related revenues. The proceeds from the offered notes will be used to repay the Company’s existing debt, pay transaction fees and expenses, and may also be used to fund shareholder distributions.

As of December 2016, the FOCUS restaurant system included 5,135 locations with annual system-wide sales of approximately $2.7 billion. The transaction relates to royalties from 5,055 franchise locations and 80 company-operated restaurants, representing approximately 98.4% and 1.6% of total system-wide locations, respectively. Approximately 76.0% of the restaurants are located in the United States and the remainder are located across 60 countries.

KBRA analyzed the transaction using the General Rating Methodology for Asset-Backed Securities published on July 30, 2012. KBRA will review the final operative agreements and legal opinions for the transaction prior to closing.

For complete details on the analysis, please see KBRA’s Pre-Sale Report, FOCUS Brands Funding LLC, Carvel Funding LLC, McAlister’s Funding LLC – Series 2017-1 Senior Secured Notes which was published today at www.kbra.com.

The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: FOCUS Funding LLC, Carvel Funding LLC, McAlister’s Funding LLC – Series 2017-1 Senior Secured Notes

Series 2017-1     Rating     Initial Principal Balance*
Class A-1     BBB+ (sf)     $200,000,000
Class A-2-I     BBB+ (sf)     $600,000,000
Class A-2-II     BBB+ (sf)    

*Actual notional amount of the Class A-2-I and Class A-2-II notes have not yet been determined but will sum up to $600 million.

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled Disclosure is available at the following link: FOCUS Brands Funding LLC, Carvel Funding LLC, McAlister’s Funding LLC Representations and Warranties Disclosure.

Related Publications: (available at www.kbra.com)

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical:
Kroll Bond Rating Agency
Xilun Chen, 646-731-2431
Senior Director
xchen@kbra.com
or
Anthony Nocera, 646-731-2350
Senior Managing Director
anocera@kbra.com
or
Andrew Lin, 646-731-2483
Associate Director
alin@kbra.com

Contacts

Analytical:
Kroll Bond Rating Agency
Xilun Chen, 646-731-2431
Senior Director
xchen@kbra.com
or
Anthony Nocera, 646-731-2350
Senior Managing Director
anocera@kbra.com
or
Andrew Lin, 646-731-2483
Associate Director
alin@kbra.com