Sonic Completes Issuance of Securitized Notes
18 May 2016 - 6:05AM
Business Wire
Sonic Announces Increase to Share Repurchase
Program
Sonic Corp. (NASDAQ:SONC), the nation's largest chain of
drive-in restaurants, today announced that certain of its
subsidiaries have issued $425 million of Series 2016-1 Class
A-2 Fixed Rate Senior Secured Notes (the "2016 Fixed Rate Notes")
in a private securitization transaction. The 2016 Fixed Rate Notes
will have an expected life of seven years and bear interest
at 4.47% per annum, payable monthly. Guggenheim Securities,
LLC acted as sole structuring advisor and active book-running
manager for the transaction.
The same Sonic subsidiaries have also entered into a
$150 million securitized revolving credit facility of Series 2016-1
Class A-1 Variable Funding Senior Secured Notes (the “2016 Variable
Funding Notes” and, together with the 2016 Fixed Rate Notes, the
"2016 Notes"). The Company does not currently have any borrowings
under the 2016 Variable Funding Notes facility.
The net proceeds from the sale of the 2016 Fixed Rate Notes will
be used to repay the approximately $266 million in outstanding
Series 2011-1 Class A-2 Fixed Rate Senior Secured Notes and the
$67 million in outstanding Series 2011-1 Class A-1 Variable
Funding Senior Secured Notes, together with related prepayment
premium and transaction costs. The remaining net proceeds will be
available for further investment in the business and to return to
shareholders via share repurchase or dividends. Including the
impact of the transaction, net interest expense is projected to be
$26 to $27 million for fiscal year 2016.
The subsidiaries that will issue the 2016 Notes are indirect
subsidiaries of Sonic Corp. that own substantially all of the Sonic
system's franchising assets and real estate. The servicing and
repayment of the 2016 Notes will be made solely from the cash flows
derived from these indirect subsidiaries' assets. Neither Sonic
Corp., the ultimate parent of each of the subsidiaries involved in
the securitization, nor any other subsidiary of Sonic Corp., will
be liable for any obligations under the 2016 Notes.
The 2016 Notes will not be registered under the Securities Act
and may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements. This is not an offer to sell or a solicitation of an
offer to buy the Senior Notes.
Share Repurchase
Sonic also announced that its board of directors approved an
incremental $155 million share repurchase authorization. The
new authorization allows for up to $155 million of common
stock to be repurchased through August 31, 2017. This is
in addition to the over $21 million remaining for repurchase
under the prior authorization expiring on
August 31, 2016. Share repurchases may be made from
time-to-time in the open market or otherwise, including through an
accelerated share repurchase program, under the terms of a Rule
10b5-1 plan, in privately negotiated transactions or in round lot
or block transactions.
"We are very pleased that we were able to leverage the strength
of our business to optimize our capital structure," said Clifford
Hudson, Chairman and Chief Executive Officer. "The increase in our
share repurchase authorization and extension of the program through
fiscal 2017 enables us to continue to maximize shareholder value.
Since fiscal 2013, we have returned over $370 million to
shareholders through share repurchases and dividends.
"We continue to build our brand and execute our key initiatives
using our multi-layered growth strategy, comprised of same-store
sales growth, operating leverage, new unit growth and effective
deployment of free cash flow to drive double-digit earnings growth
in the near and long term.”
The company continues to expect adjusted earnings per share
growth for fiscal 2016 of 20% to 25%. For the fiscal third quarter
ended May 31, 2016 the company expects system same-store
sales growth to be positive, but below the full-year target of 4%
to 6% as a result of slower industry traffic and modestly
unfavorable weather during the quarter.
About Sonic
SONIC, America's Drive-In is the nation's largest drive-in
restaurant chain serving more than 3 million customers every day.
Nearly 90 percent of SONIC's 3,500 drive-in locations are owned and
operated by local business men and women. For more than 60 years,
SONIC has delighted guests with signature menu items, more than 1.3
million drink combinations and friendly service by iconic Carhops.
To learn more about Sonic Corp. (NASDAQ/NM: SONC), please visit
www.sonicdrivein.com or follow us on
Facebook and Twitter.
This press release contains forward-looking statements within
the meaning of the federal securities laws. Forward-looking
statements reflect management’s expectations regarding future
events and operating performance and speak only as of the date
hereof. These forward-looking statements involve a number of risks
and uncertainties. Factors that could cause actual results to
differ materially from those expressed in, or underlying, these
forward-looking statements are detailed in the company’s annual and
quarterly report filings with the Securities and Exchange
Commission. The company undertakes no obligation to publicly
release revisions to these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the
occurrence of unforeseen events, except as required to be reported
under the rules and regulations of the Securities and Exchange
Commission.
SONC-F
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version on businesswire.com: http://www.businesswire.com/news/home/20160517006242/en/
Sonic Corp.Corey Horsch, 405-225-4800Vice President, Investor
Relations and Treasurer
Sonic (NASDAQ:SONC)
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