Research Update: Elvis UK Holdco Ltd. (Restaurant Brands Iberia) Affirmed At 'B' On Ibersol Burger King Network Deal; Outlook Stable

Elvis UK Holdco Ltd., parent of Restaurant Brands Iberia (RBI), issued a €260 million add-on to its existing €538 million senior secured term loan B (TLB) to acquire Grupo Ibersol's network of Burger Kings in Spain and Portugal. Although the group exhibits strong operating performance and has some levers to mitigate inflationary pressures, we believe that acceleration of its expansion plan--through acquisitions and greenfield openings--will mean still-elevated leverage and materially negative free operating cash flow (FOCF), narrowing rating headroom amid an unfavorable macroeconomic context. We therefore assigned our 'B' issue rating and '3' recovery rating to the TLB add-on and affirmed our 'B' long-term issuer credit rating on Elvis UK Holdco and our 'B' issue rating and '3' recovery rating

...- Elvis UK Holdco Ltd., parent of Restaurant Brands Iberia (RBI), issued a 260 million add-on to its existing 538 million senior secured term loan B (TLB) to acquire Grupo Ibersol's network of Burger Kings in Spain and Portugal. - Although the group exhibits strong operating performance and has some levers to mitigate inflationary pressures, we believe that acceleration of its expansion plan--through acquisitions and greenfield openings--will mean still-elevated leverage and materially negative free operating cash flow (FOCF), narrowing rating headroom amid an unfavorable macroeconomic context. - We therefore assigned our 'B' issue rating and '3' recovery rating to the TLB add-on and affirmed our 'B' long-term issuer credit rating on Elvis UK Holdco and our 'B' issue rating and '3' recovery rating on its 688 million first-lien debt. - The stable outlook reflects our expectation that RBI should soundly execute its expansion plan and successfully integrate the Ibersol network in a difficult...

Research Update