Kroll Bond Rating Agency Assigns Preliminary Ratings to Jimmy John’s Funding, LLC Series 2017-1 Senior Secured Notes

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

This transaction is structured as a “whole business securitization” in which Jimmy John’s LLC and its subsidiaries (“Jimmy John’s” or the “Company”) will contribute most of its revenue-generating assets in the United States to Jimmy John’s Funding, LLC and its subsidiaries as collateral for the offered notes. The collateral includes existing and future domestic franchise agreements and development agreements, existing and future Company-operated restaurant synthetic royalties, revenues from the Buying Group, and intellectual property. The proceeds from the offered notes will be used to repay its existing credit facility, pay certain transaction expenses, make deposits to required reserve accounts, and for general corporate purposes.

As of March 2017, the Jimmy John’s restaurant system included 2,690 locations with annual system-wide sales of approximately $2.2 billion (on a LTM March 2017 basis). The transaction relates to royalties from 2,627 franchise locations and 63 Company-operated restaurants, representing approximately 97.7% and 2.3% of total system-wide locations, respectively. All of the restaurant locations are within the United States.

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, Jimmy John’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: Jimmy John’s Funding, LLC – Series 2017-1 Senior Secured Notes

         
Series 2017-1   Rating   Initial Principal Balance
Class A-1   BBB (sf)   $50,000,000
Class A-2-I*   BBB (sf)   $400,000,000
Class A-2-II*   BBB (sf)   $400,000,000
* An additional $100m of preapproved additional Class A-2 Notes may be issued if certain conditions are met.
* Initial amount of each tranche will be at least $300 mm
 

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: Jimmy John’s Funding, LLC Representations and Warranties Disclosure.

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

Follow us on Twitter!
@KrollBondRating

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:
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:
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