NEW YORK (CNNfn) - Burger King Corp., the world's second-largest hamburger chain, may still launch an initial public offering, but the new issue won't take place this year, a spokesman told CNNfn.com Thursday.|
There is no set timeline for an IPO of Burger King's common stock but the whopper behemoth may go public sometime next year, company spokesman Ron Doughty said. Miami-based Burger King would still offer 20 percent to the public in the IPO, he said.
At the same time, Burger King could opt to implement a leveraged buyout instead of an IPO. In which case, the LBO would occur sometime this year, Doughty said.
"While the separation will happen, we still don't have an answer whether it will be an IPO or LBO," he said.
A slowing economy and the flight from technology stock has caused a draught of new issues this year. Plans for a Burger King IPO depends on market conditions, Doughty said.
Last summer, British food and drinks firm Diageo PLC announced plans to offer shares in Burger King, its U.S.-based fast-food restaurant chain, on the New York Stock Exchange. However, those plans were put on hold. In February, Diageo CEO Paul Walsh told CNN that the drinks company could float an IPO of Burger King at any time.
Burger King is the world's No. 2 hamburger chain behind McDonald's, which recently launched its own IPO in Japan.
Burger King CEO John Dasburg, the former Northwest Airlines CEO who joined the company last February, is currently reviewing options and will make his recommendations to parent firm Diageo.
Diageo (DEO: unchanged at $41.00, Research, Estimates) agreed Thursday to transfer some foreign assets to Burger King in the event of an IPO. British food and drinks firm also agreed to leave Burger King's balance sheet healthy so that it will support investment grade unsecure debt rated "BBB" or higher by Standards and Poor's.
Burger King, which has about $1 billion of long-term debt owed to Diageo on its balance sheet, hopes to avoid the situation that occurred when PepsiCo spun off Tricon Global Restaurants Inc. in 1997. Tricon's (YUM: down $0.46 to $44.70, Research, Estimates) three brands include KFC, Pizza Hut and Taco Bell.
When Tricon separated from PepsiCo, the parent firm transferred $6 billion of debt to Tricon's balance sheet, an industry source said. "Tricon still does not have an investment grade balance sheet," the source said.