Kroll Bond Rating Agency Assigns Preliminary Ratings to Five Guys Funding, LLC – Series 2017-1 Senior Secured Notes

NEW YORK--()--Kroll Bond Rating Agency (KBRA) announces the preliminary ratings to two note classes of Five Guys Funding, LLC, a whole business securitization.

Five Guys Enterprises, LLC (“Five Guys”, or “the Company”) will contribute most of its revenue-generating assets in the United States and Canada to Five Guys Funding, LLC as collateral for the offered notes. The collateral includes existing and future domestic franchise agreements, existing and future company-operated restaurant royalties, U.S. and Canadian intellectual property and related license agreements, collections from company-operated restaurants and bakery sales, and certain international collections. The proceeds from the offered notes will be used to refinance its existing credit facility, pay certain transaction expenses and fund the capital enhancement account.

As of March 2017, the Five Guys restaurant system included 1,437 locations of which 1,360 were located in North America, with annual system-wide sales of approximately $1.6 billion. The transaction is supported by royalties from 908 franchise locations and 452 company-operated restaurants, representing approximately 66.8% and 33.2% of total North American locations, respectively. The transaction also benefits from license revenue related to locations outside of North America. Approximately 94.6% of the restaurant locations are within North America, while the remainder are outside of North America, across 7 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, Five Guys 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: Five Guys Funding, LLC – Series 2017-1 Senior Secured Notes

Series 2017-1     Rating     Initial Principal Balance
Class A-1     BBB (sf)     $40,000,000
Class A-2     BBB (sf)     $400,000,000

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: Five Guys 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