Sapna Maheshwari and Emre Peker report at Bloomberg Businessweek that Dunkin’ Brands Inc., owner of Dunkin’ Donuts and Baskin-Robbins restaurants, is taking advantage of a rally in high-yield debt to raise about $2 billion for a payout to its private-equity shareholders.
The company, purchased in 2006 by Bain Capital LLC, Carlyle Group and Thomas H. Lee Partners LP, plans to sell $625 million of senior notes and obtain a $1.35 billion senior credit line to repay securitized debt and help fund a dividend, Dunkin’ Brands said today in a statement distributed by PR Newswire.
Dunkin’ Brands follows Brickman Group Holdings Inc., Goodman Global Inc. and Asurion Corp. in tapping investor demand that’s enabling private-equity firms to carve out payouts before a possible doubling of taxes on dividends in 2011. Banks arranged or started marketing almost $7 billion of leveraged loans in October, 3.5 times more than the year’s average and the most since the credit crisis.
“The conditions are ripe for more debt-financed payments to shareholders,” said John Lonski, chief economist at Moody’s Capital Markets Group in New York. “The absolute level of speculative-grade bond yields are the lowest they’ve been since 2005.”
The average yield on junk debt fell to 7.74 percent on Oct. 22, the lowest since 7.73 percent on June 6, 2007, according to Bank of America Merrill Lynch’s U.S. High Yield Master II index. High-yield, high-risk debt is rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s.
Dunkin’ Brands’ notes will be issued through Dunkin’ Finance Corp., according to the statement.
JPMorgan Chase & Co. and Deutsche Bank AG will manage the bond sale and Barclays Plc will arrange the loan, according to a person familiar with the negotiations, who declined to be identified because the terms are private.
Michelle King, a spokeswoman for Canton, Massachusetts- based Dunkin’ Brands, declined to comment on the financing details.
Read more at: Bloomberg Businessweek