Moody’s gives B3 to 1011778 BC notes

Moody's Investors Service said it assigned a B3 rating to 1011778 BC ULC’s proposed $1 billion senior secured second-lien notes.

The company's existing ratings are unchanged, including the B1 corporate family rating, B1- PD probability of default rating, Ba3 first-lien bank ratings, Ba3 first lien note ratings and B3 second-lien note ratings.

The speculative grade liquidity rating is SGL-1 and the outlook is stable.

Proceeds from the proposed $1 billion debt offering will be used to redeem a portion of the outstanding $2.25 billion 6% second-lien notes due April 2022 and to pay related premiums, fees and expenses.

The agency said the B1 corporate family rating reflects 1011778 BC's relatively high leverage, modest cash flow metrics, relatively aggressive financial policy and significant remodeling requirements of its franchisees.

Moody’s said the stable outlook reflects the view that the company's steady pipeline of new product offerings, constant focus on costs, growth initiatives and debt reduction over and above required amortization will result in a steady improvement in earnings and credit metrics over the next 12 to 18 months with leverage declining to under 5.5 times.

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