Burger King's $1.1 billion term loan "B" traded thinly when it broke at 100 1/2 in the secondary market last week. A trader said this was expected because the deal was not widely distributed. Citigroup and JPMorgan lead the deal, which is priced at LIBOR plus 1 3/4%. The deal also consists of a $250 million term loan "A" and a $150 million revolver. A dealer said the term loan "A" did not trade. The term loan "B" has a $750 million tranche and a $350 million add-on.
Moody's Investors Service assigned a Ba2 rating to all tranches of the credit facility. Burger King will use proceeds from the add-on loan and cash to fund a $400 million dividend to private equity holders, according to Moody's. The fast-food retailer also plans to do an initial public offering in the latter half of 2006, with proceeds used to reduce debt. Moody's changed its outlook on Burger King to negative from stable because of its higher debt levels. The ratings agency expects the company's leverage on an adjusted debt to EBITDA basis to exceed six times. A Burger King spokesperson did not return calls.