KBRA Assigns Preliminary Ratings to Driven Brands Funding, LLC – Series 2019-1 Senior Secured Notes

NEW YORK--()--Kroll Bond Rating Agency (KBRA) announces the preliminary ratings to a note class of Driven Brands Funding, LLC, a whole business securitization.

Driven Brands, Inc. (“Driven Brands” or the “Company”) completed its first whole business securitization in July 2015. The transaction structure is a master trust, and the Series 2019-1, Class A-2 Notes represent the Company’s fourth securitization within the trust. Driven Brands Funding, LLC (the “Issuer”) is expected to issue $300 million of Class A-2 Notes (pari passu with the Series 2015-1 A-2 Notes, Series 2016-1 A-2 Notes and Series 2018-1 A-2 notes). The Company will not be contributing new collateral in connection with this transaction.

KBRA will be affirming the ratings on the Issuer’s Outstanding Notes at transaction close. The affirmation will reflect collateral performance, which is expected to be in line with KBRA’s rating scenarios, and the expectation that the Outstanding Notes will continue to pass their respective rating level stresses with the addition of the Series 2019-1 Notes.

Driven Brands is one of the largest franchisors in the aftermarket automobile services and parts distribution industries. The Company franchises, owns, operates and manages locations under the core brands of CARSTAR, Maaco, Meineke, 1-800-Radiator & A/C and Take 5 Oil Change. The collateral consists of all existing and future franchise agreements in the United States, royalties from existing and future company-operated locations, product sourcing agreements, existing and future collections and profits from company-operated Take 5 locations, related intellectual property and a license fee from Canadian franchises. As of December 29, 2018, the portfolio comprised of 2,283 franchise locations and 305 company-owned locations, most of which are Take 5 locations. The collateral for the offered notes also includes, to a lesser degree, franchises that operate under the Merlin, Pro Oil Change, Econo-Lube N’ Tune, Aero Colours, Drive N Style, and AutoQual brand names. The Company has a network of approximately 2,600 locations across 49 states and ten Canadian provinces.

KBRA analyzed the transaction using the Global General Rating Methodology for Asset-Backed Securities published on November 28, 2017. KBRA also conducted an on-site operational review of Driven Brands at its Charlotte, NC headquarters in March 2018. 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, “Driven Brands Funding, LLC, Series 2019-1”, which was published 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: Driven Brands Funding, LLC – Series 2019-1 Senior Secured Notes

Series 2019-1     Preliminary Rating     Initial Principal Balance
Class A-2     BBB (sf)     $300,000,000
       

To access ratings, reports and disclosures, click here.

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

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical:
Xilun Chen, Senior Director
(646) 731-2431
xchen@kbra.com

Abby Barkwell, Associate Director
(646) 731-3304
abarkwell@kbra.com

Shane Olaleye, CFA, Associate Director
(646) 731-2432
solaleye@kbra.com

Shi Shen, CFA, Associate
(646) 731-2480
sshen@kbra.com

Contacts

Analytical:
Xilun Chen, Senior Director
(646) 731-2431
xchen@kbra.com

Abby Barkwell, Associate Director
(646) 731-3304
abarkwell@kbra.com

Shane Olaleye, CFA, Associate Director
(646) 731-2432
solaleye@kbra.com

Shi Shen, CFA, Associate
(646) 731-2480
sshen@kbra.com