The provisional ratings are based on a review by DBRS Morningstar of the following analytical considerations:
Relatively short repayment window for the Notes with a shorter forecast performance period and higher visibility into the viability of brands managed by
The ultimate payment of interest and principal on classes of Notes referenced above in accordance with transaction documents.
The Company's track record of consistent financial performance with systemwide sales, revenues, average unit volume (AUV), and store count steadily growing over the past five years.
DBRS Morningstar's operational review of
Credit review of the Company by DBRS Morningstar.
This transaction is secured by 100% ownership of the equity interests in the subsidiaries of
Assumptions on AUV growth in the cash flow scenarios and weighted-average royalty fees kept flat across all brands.
The structural features of the transaction, such as relatively moderate leverage, the cash reserve accounts, the cash sweep mechanism, and the rapid amortization triggers, which help to accelerate the paydown of the Note balance upon deterioration in the business environment.
Legal analysis of the structure, including separation of the assets from the operating company, non-consolidation, and true-contribution opinions.
Under various cash flow scenarios, the Notes would be repaid in accordance with the transaction's terms, even if business performance deteriorates.
The structuring consultant intends to issue security tokens to all investors and record this transaction on the Ethereum blockchain. Any security tokens issued in this transaction will serve as digital representations of respective ownership in all four classes of Notes. This use of blockchain and distributed ledger technology will only occur outside of and parallel to this transaction and will not govern actual ownership of the Notes. The underlying documentation for this transaction will govern all aspects of the Notes and reference is made to the transaction documents for the terms and conditions thereof.
Notes:
All figures are in
The principal methodology is
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.
The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrs.com.
For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.
Ratings
Date Issued Debt Rated Action Rating Trend Issued
i
US =
CA = Canada Issued, NRSRO
EU = EU Issued, NRSRO
E = EU endorsed
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-Participating
23-Jan-20 Series 2020-1, Class A-1 Notes Provis.-New BB (sf) -- US
23-Jan-20 Series 2020-1, Class A-2 Notes Provis.-New BB (sf) -- US
23-Jan-20 Series 2020-1, Class B-1 Notes Provis.-New B (sf) -- US
23-Jan-20 Series 2020-1, Class B-2 Notes Provis.-New B (sf) -- US
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