KBRA Assigns Preliminary Ratings to Jimmy John’s Funding, LLC Series 2022-1 Senior Secured Notes
NEW YORK–(BUSINESS WIRE)–#KBRA–KBRA assigns preliminary ratings to four classes of notes from Jimmy John’s Funding, LLC Series 2022-1, a whole business securitization.
Jimmy John’s LLC (“Jimmy John’s”, or the “Company”) and certain of its subsidiaries completed its first whole business securitization (WBS) in July 2017. The transaction structure is a master trust and the Series 2022-1 Class A-1 Notes, Class A-2-I Notes, Class A-2-II Notes, and the Class A-2-III Notes (the “Series 2022-1 Notes”) represent the Company’s second securitization within the trust. Jimmy John’s Funding, LLC (the “Issuer”) is issuing $825 million of Series 2022-1 Notes, which share the collateral with the Existing Notes (defined below). 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 for general business purposes of the Issuer’s indirect parent, Inspire Brands, including to repay approximately $485 million of its outstanding notes. Commitments under the 2017-1 A-1 note purchase agreement (“2017-1 A-1 NPA”) will be paid down and the 2017-1 A-1 NPA will be terminated.
As of October 3, 2021 (“Q3 2021”), the Company’s restaurant system included 2,674 locations in the U.S. The transaction includes royalty payments from 2,633 franchise locations and 41 domestic company-operated restaurants, representing approximately 98% and 2% of total system-wide locations, with annual system-wide sales of approximately $2.3 billion as of the twelve months ending (“LTM”) Q3 2021.
In conjunction with the issuance of the Series 2022-1 Notes, KBRA anticipates affirming the rating on the Issuer’s outstanding Series 2017-1 Class A-2-II Notes (the “Existing Notes”, and together with the Series 2022-1 Notes, the “Notes”) and withdrawing ratings on the Series 2017-1 Class A-1 Notes. The rating is consistent with the results of our cash flow scenarios following the addition of the Series 2022-1 Notes.
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Related Publications
- Whole Business Securitization ABS Global Rating Methodology
- Global Structured Finance Counterparty Methodology
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Disclosures
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
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Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. 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. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.
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