Burger King holders plan whopper dividend
Moody's says private equity backers will collect $400 million before taking fast-food chain public.
NEW YORK -(Dow Jones)- Burger King Corp.'s (BKG.XX) private equity backers are looking to king-size their returns from the chain ahead of its initial public offering, with plans to collect a $400 million dividend, according to Moody's Investors Services.
The payout would put the investors - Texas Pacific Group (TPG.XX), Bain Capital (BCI.XX) and Goldman Sachs Capital Partners - in the black on their investment, as they are believed to have injected $325 million in equity during the $1.5 billion purchase of Burger King in 2002.
Burger King is proposing to fund the dividend with cash on hand and a $350 million senior secured term loan, according to Moody's. Underwriting the loan are J.P. Morgan Chase & Co. (JPM) and Citigroup Inc. (C).
Moody's lowered Burger King's outlook to negative from stable as a result of the planned dividend. The company's debt load is expected to be more than six times Ebitda, or earnings before interest, taxes, depreciation and amortization, after the dividend and isn't expected to fall below four times Ebitda before 2009, Moody's said. That's despite the fact that proceeds from the planned IPO will likely go to pay down debt.
Burger King Chief Executive Greg Brenneman said Wednesday that the company planned to file for an IPO - the first in the chain's 52-year history - by early March at the latest. Burger King would not comment on specifics of the proposed IPO, although Standard & Poor's said that it would be worth at least $600 million .
Representatives from the private equity firms and Burger King could not be reached for comment.