Yum! Brands, Inc. (NYSE: YUM) today announced the expiration of and
final results for its previously announced cash offers to purchase up to
$550 million aggregate principal amount (the “Tender Cap”) of certain of
its senior unsecured notes (the “Notes”). The terms and conditions of
the tender offers are described in the Offer to Purchase, dated October
22, 2013 (the “Offer to Purchase”), and the related Letter of
Transmittal. As previously announced on November 5, 2013, the Tender Cap
was increased from $525 million to $550 million and the tender sub-cap
applicable to the 6.875% Senior Notes due 2037 (the “2037 Notes”) was
increased from $250 million to $275 million (the “Tender Sub-Cap”).
The tender offers for the Notes expired at 11:59 p.m., New York City
time, on Tuesday, November 19, 2013 (the “Expiration Date”).
The total aggregate principal amount of Notes validly tendered at or
prior to the Expiration Date and not validly withdrawn was
$1,057,000,000, which exceeds the Tender Cap. In accordance with the
terms of the tender offers set forth in the Offer to Purchase, Yum!
Brands accepted for purchase a portion of the validly tendered 2037
Notes and 6.250% Senior Notes due 2018 (the “2018 Notes”) in an
aggregate principal amount equal to the Tender Cap. Yum! Brands did not
accept for purchase any 6.250% Senior Notes due 2016 (the “2016 Notes”),
5.300% Senior Notes due 2019 (the “2019 Notes”), or 4.250% Senior Notes
due 2015 (the “2015 Notes”).
According to information provided by D.F. King & Co., Inc., the Tender
Agent and Information Agent for the tender offers, $370,872,000
aggregate principal amount of the 2037 Notes and $351,712,000 aggregate
principal amount of the 2018 Notes were validly tendered at or prior to
the Expiration Date and not validly withdrawn. In accordance with the
terms of the tender offers Yum! Brands has accepted for purchase an
aggregate of $275 million of 2037 Notes, an amount equal to the Tender
Sub-Cap applicable to the 2037 Notes, and $275 million of 2018 Notes,
equal to the amount of the Tender Cap available after subtracting the
Tender Sub-Cap applicable to the 2037 Notes. In accordance with the
terms of the tender offers, Yum! Brands has accepted only a portion of
the Notes tendered by the holders of the 2037 Notes and the 2018 Notes.
The proration factor applicable to the 2037 Notes was approximately 74%,
determined by dividing $275 million, the Tender Sub-Cap, by the total
amount of 2037 Notes tendered. The proration factor applicable to the
2018 Notes was approximately 78%, determined by dividing $275 million,
the remaining portion of the Tender Cap available for purchase of Notes,
by the total amount of 2018 Notes tendered. All 2037 Notes and 2018
Notes that were not accepted for purchase will be returned to holders in
accordance with the Offer to Purchase. The 2016 Notes, the 2019 Notes,
and the 2015 Notes that were tendered were returned to the holders in
accordance with the Offer to Purchase.
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Title of Security (CUSIP Number)
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Principal Amount Outstanding
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Tender Sub-Cap
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Acceptance Priority Level
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Fixed Spread (basis points)
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U.S. Treasury Reference Security
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Bloomberg Reference Page
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Early Tender Payment
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Total Consideration
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Tender Offer Consideration
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6.875% Senior Notes due 2037 (988498 AD3)
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$600,000,000
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$275,000,000
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1
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165
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2.875% U.S. Treasury Note due 05/15/2043
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PX1
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$50
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$1,191.43
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$1,141.43
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6.250% Senior Notes due 2018 (988498 AC5)
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$600,000,000
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N/A
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2
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40
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1.375% U.S. Treasury Note due 09/30/2018
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PX1
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$50
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$1,185.94
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$1,135.94
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For the 2037 Notes and the 2018 Notes that were validly tendered and not
validly withdrawn at or prior to the Early Tender Time (as defined in
the Offer to Purchase) and accepted for purchase, the applicable total
consideration per $1,000 principal amount of each series of Notes (for
each series, the “Total Consideration”) is as specified in the table
above. The Total Consideration includes the Early Tender Payment.
Holders of the 2037 Notes and 2018 Notes tendered after the Early Tender
Time and at or prior to the Expiration Date and accepted for purchase
will receive only the applicable Tender Offer Consideration, namely the
applicable Total Consideration less the Early Tender Payment.
In addition, holders whose Notes are purchased in the tender offers will
be paid accrued and unpaid interest on their purchased Notes from the
applicable last interest payment date up to, but not including, the
payment date for such purchased Notes. The conditions to the tender
offer have been satisfied; therefore, payment for the purchased Notes
will be made today.
Yum! Brands has retained Goldman, Sachs & Co. and J.P. Morgan Securities
LLC to serve as the Lead Dealer Managers for these tender offers.
Goldman, Sachs & Co. may be contacted at (800) 828-3182 (toll free) or
(212) 357-0215 (collect) and J.P. Morgan Securities LLC may be contacted
at (866) 834-4666 (toll free) or (212) 834-4811 (collect). Yum! Brands
has also retained D.F. King & Co., Inc. to serve as the Tender Agent and
the Information Agent for the tender offers.
This press release is neither an offer to sell nor a solicitation of
offers to buy any securities. The tender offers were made only pursuant
to the Offer to Purchase and the related Letter of Transmittal. The
tender offers were not made to holders of Notes in any jurisdiction in
which the making or acceptance thereof would not be in compliance with
the securities, blue sky or other laws of such jurisdiction. Please
refer to the Offer to Purchase and related Letter of Transmittal for a
description of offer terms, conditions, disclaimers, and other
information applicable to the tender offers.
Estimate of Earnings Charge
Yum! Brands purchased $550 million aggregate principal amount of Notes
in the recently completed tender offers. Due primarily to the premiums
paid in connection with the purchase of these Notes, Yum! Brands is
recording a pre-tax charge of approximately $120 million in the fourth
quarter of 2013 within Special Items.
About Yum! Brands
Yum! Brands, Inc., based in Louisville, Kentucky, has over 40,000
restaurants in more than 130 countries and territories. Yum! Brands is
ranked #201 on the Fortune 500 List with revenues of over $13 billion in
2012 and in 2013 was named among the top 100 Corporate Citizens by
Corporate Responsibility Magazine. The Company's restaurant brands -
KFC, Pizza Hut and Taco Bell - are the global leaders of the chicken,
pizza and Mexican-style food categories. Outside the United States, the
Yum! Brands system opened on average over five new restaurants per day
in 2012, making it a leader in international retail development.
Copyright Business Wire 2013