Yum! Brands downsizes to $2.1 billion, sets price talk in two-part notes offering; pricing Thursday

By Paul A. Harris

Portland, Ore., June 2 – Yum! Brands Inc. downsized its two-part offering of senior notes (B1/BB) to $2.1 billion from $2.3 billion, shifting the proceeds to its concurrent term loan, market sources said on Thursday.

Official price talk circulated. The deal is coming in tranches of eight-year notes, non-callable for three years, talked in the 5% area, and 10-year notes, non-callable for five years, talked to yield in the 5¼% area.

Talk on the eight-year notes comes at the wide end of the 4¾% to 5% early guidance. Talk on the 10-year notes, meanwhile, comes on top of guidance, which had them yielding 25 basis points behind the eight-year notes.

The deal is oversubscribed, with $5.25 billion of orders evenly split between both tranches, an investor said.

Final tranche sizes remain to be determined.

Books close at noon ET, and the Rule 144A and Regulation S deal is set to price thereafter.

Goldman Sachs & Co. is the left bookrunner. J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Wells Fargo Securities LLC and Morgan Stanley & Co. LLC are the joint bookrunners.

BofA Merrill Lynch, Fifth Third, MUFG, Barclays, ICBC and Rabobank are the co-managers.

The Louisville, Ky.-based fast food company plans to use the proceeds, together with $2.3 billion of new credit facilities and available cash, to make a cash distribution to its parent, to be used to fund share repurchases and/or a special dividend, also to repay its existing credit facility and for general corporate purposes.

Yum! operates KFC, Pizza Hut and Taco Bell.

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