Church’s Chicken Completes $250 Million Securitization Issuance

By Business Wire November 6, 2021

ATLANTA–(BUSINESS WIRE)–Church’s Chicken® (“Church’s” or the “Company”), one of the world’s largest quick service chicken restaurant chains, announced it has closed an offering by certain of its subsidiaries for $225,000,000 Series 2021-1 Fixed Rate Senior Secured Notes, Class A-2 (the “Offered Notes”). This transaction was structured as a whole business securitization through five special purpose subsidiaries (the “Co-Issuers”) and represents Church’s third whole business securitization issuance. The Offered Notes were priced at a coupon of 3.931% and have an expected term of five years.

Proceeds from the issuance will be used to repay a bridge facility that High Bluff Capital Partners, supported by various alternative investment funds managed by FS Investments, used to acquire Church’s in September 2021. The Offered Notes received a rating of BBB from Kroll Bond Rating Agency, consistent with the rating for Church’s previous whole business securitization issuance (which closed in 2017 and was refinanced concurrently with the acquisition of Church’s). The Co-Issuers also issued $25,000,000 Series 2021-1 Variable Funding Senior Secured Notes, Class A-1, which will allow the Co-Issuers to borrow amounts from time to time on a revolving basis (“VFN Notes”).

“Having shown remarkable resiliency over the course of the pandemic through the outstanding efforts of our team members and franchisees, Church’s Chicken is moving forward with tremendous momentum,” said Joe Christina, CEO of Church’s Chicken. “This financing underscores the strength of the Church’s brand and demonstrates considerable confidence in our ability to execute our ambitious growth agenda and continue to build this great brand.”

“We’re very pleased with this transaction, with its 3.931% coupon marking a meaningful improvement versus the 6.500% coupon of Church’s 2017 offering,” said Coady Smith from High Bluff Capital Partners. “This is a clear indication from the market that Church’s is a significantly different company today than it was in 2017. We look forward to supporting the leadership team to continue on this positive trajectory through additional innovation and investment, and delivering best-in-class opportunities to franchisees.”

The Offered Notes were sold to qualified institutional buyers in the United States in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons outside the United States in accordance with Regulation S under the Securities Act. The Class A-2 Notes have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable securities laws of any state or other jurisdiction. The Class A-2 Notes, together with the VFN and LR Notes, herein referred to as the “New Notes”. This press release does not constitute an offer to sell or the solicitation of an offer to buy the New Notes or any other security, nor shall there be any offer, solicitation or sale of the New Notes or any other security in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful.

About Church’s Chicken®

Founded in San Antonio, Texas, in 1952 by George W. Church, Church’s Chicken® is one of the largest quick-service restaurant chicken chains in the world. Church’s® specializes in Original and Spicy Chicken freshly prepared throughout the day in small batches that are hand-battered and double-breaded, Chicken Sandwich, Texas Tenders™, Honey-Butter Biscuits™ made from scratch and freshly baked, and classic, home-style sides all for a great value. Church’s® (along with its sister brand Church’s Texas Chicken® inside the Americas and Texas Chicken® outside the Americas) has more than 1,500 locations in 26 countries and international territories. For more information, visit www.churchs.com. Follow Church’s® on Facebook at www.facebook.com/churchschicken and Twitter at www.twitter.com/churchschicken.

About High Bluff Capital Partners

Based in San Diego, California, High Bluff Capital Partners is a private investment firm that specializes in making control-oriented equity investments in iconic consumer-facing companies. The firm’s team has more than 30 years of experience managing, investing, leading and transforming consumer businesses across the restaurant, entertainment, food, beverage and retail markets. More information can be found at www.highbluffcap.com.

About FS Investments

FS Investments is a leading asset manager dedicated to helping individuals, financial professionals and institutions design better portfolios. The firm provides access to alternative sources of income and growth, and focuses on setting industry standards for investor protection, education and transparency. FS Investments is headquartered in Philadelphia, PA with offices in New York, NY, Orlando, FL and Leawood, KS. Visit www.fsinvestments.com to learn more.

Deal Advisors

Barclays acted as sole structuring advisor and sole bookrunner in connection with the whole business securitization and also provided the acquisition bridge facility. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal advisors to Church’s, High Bluff Capital Partners, and FS Investments.

Forward-Looking Statements

Statements contained in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “goal” and other similar expressions. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. These factors include, but are not limited to: disruptions caused by the COVID-19 pandemic and measures to reduce its spread and their impact on the business, operations and liquidity of Church’s; instability, disruption or destruction caused by civil insurrection or social unrest; Church’s ability to compete with other restaurants, grocery stores, food delivery services and convenience stores for customers, employees, restaurant locations and franchisees; shortages in the supply of chicken and other ingredients and supplies; risks associated with the ownership and operation of the Company Restaurants and the ownership of the real estate assets; risks associated with the franchise model; changes in consumer spending caused by changes in economic, market and other conditions, the availability of discretionary income and changes in consumer preferences and perceptions; the ability of Church’s distributors and suppliers to continue to deliver quality products to at moderate prices; changes in operating costs, as well as interest rates; increases to the cost of food, especially for chicken; food safety, food-borne illness, activities of activist groups and other concerns; the willingness of Church’s suppliers, distributors and service providers to supply it with goods and services pursuant to customary credit arrangements; risks associated with additional permitted leverage, including in connection with acquisitions; the effectiveness of Church’s marketing and advertising programs; Church’s ability to retain its current management and other key employees; Church’s ability to open new restaurants in existing and new markets and expand its franchise system; Church’s and its franchisees’ ability to comply with existing and future health, safety, employment, environmental and other government regulations; risks associated with any material failure, interruption or security breach of Church’s computer systems or technology; the occurrence of cyber incidents or risks associated with a deficiency in cybersecurity; product liability exposure; the geographic concentration of Church’s restaurants in the Southern United States; the operational and financial success of Church’s franchisees; risks associated with implementing Church’s business strategy; Church’s ability to adequately protect or establish rights in its intellectual property; reputational damage if franchisees and other licensees do not observe the required quality and trademark usage standards and other standards set forth in their franchise agreements and license agreements. The forward-looking statements contained in this release are made as of the date hereof and Church’s does not intend to, nor does it assume any obligation to, update or supplement any forward-looking statements after the date hereof to reflect actual results or future events or circumstances.

Contacts

Media inquiries
Kim Miller atkimmiller@inklinkmarketing.com

Analyst/Investor inquiries
Dusty Profumo at dprofumo@churchs.com

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