Restaurant Brands plans $750 million term loan for Carrols purchase

By Sara Rosenberg

New York, March 5 – Restaurant Brands International Inc. has received a commitment for a $750 million incremental senior secured covenant-lite term loan due Sept. 21, 2030 to help fund its acquisition of Carrols Restaurant Group Inc., according to a SC 13E3 filed with the Securities and Exchange Commission on Tuesday.

JPMorgan Chase Bank is the lead arranger and administrative agent on the term loan.

Based on the commitment letter, the term loan is expected to be priced at SOFR plus 225 basis points with a 0% floor.

Amortization on the incremental term loan is 1% per annum, and if the term loan is not in the form of an add-on to the company’s existing term loan, it is expected to include 101 soft call protection for six months.

Other funds for the transaction are expected to come from about $200 million of cash on hand.

Under the agreement, Restaurant Brands will acquire all of Carrols’ issued and outstanding shares that are not already held by Restaurant Brands or its affiliates for $9.55 per share in an all-cash transaction. This implies a total enterprise value of about $1 billion. Restaurant Brands and its affiliates currently hold about 15% of Carrols’ outstanding equity.

Closing is expected in the second quarter, subject to customary conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and Carrols stockholder approval.

Net leverage giving effect to the transaction will increase minimally and the company will remain on track to reach its previously stated net leverage target of mid-4x by the end of 2024.

Restaurant Brands is a Toronto-based quick service restaurant company. Carrols is a Syracuse, N.Y.-based franchisee of Burger King and Popeyes restaurants.

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