King & Spalding’s specialty finance team has closed a number of esoteric securitization transactions and a companion specialty senior secured high yield note issuance in the first half of 2020. Adapting to changing market conditions during this period, King & Spalding has worked on a range of specialty finance matters, and helped its clients to continue providing liquidity to the securitization markets, including whole business securitizations in the restaurant, property restoration and aftermarket automobile services space, a data center securitization, a telecom securitization, a securitization of life science and healthcare loans and a high yield issuance by a multi-branded restaurant company.
Multiple Restaurant Transactions
In a deal that closed on January 22, King & Spalding represented the sole structuring advisor and joint book-running manager, and the several banks acting as joint book-running managers and co-managers in the sale of $900 million fixed-rate notes backed by the whole-business securitization of Sonic LLC (“Sonic”). Sonic is a nationally known franchisor, owner and operator of the largest chain of drive-in restaurants in the United States. The securitization is the fifth series of securitization notes issued by Sonic and is the first issuance since Sonic’s acquisition by Inspire Brands. The transaction involved substantially modernizing the securitization documentation to match the operational and financial flexibility included in Inspire Brands’ other securitization facilities.
In a companion deal that closed on May 21, King & Spalding represented the left lead arranger and initial purchasers in connection with a $750 million senior secured high yield note issuance by Inspire Brands. Inspire Brands is a multi-branded restaurant company whose portfolio includes Arby’s, Buffalo Wild Wings, Sonic, Rusty Taco, and Jimmy John’s restaurants. The transaction is one of the first capital markets issuances in the restaurant industry since the beginning of the COVID-19 pandemic. King & Spalding has also represented the structuring agent on each of the whole business securitizations owned by Inspire Brands to date, including the Sonic transaction described above, and the prior Arby’s and Jimmy John’s securitizations, as well as the existing indebtedness held by Inspire Brands, comprising a $2.6 billion first lien credit facility and $485 million unsecured notes.
Property Restoration Securitization
In a deal that closed on June 1, King & Spalding represented the committed note purchaser in an additional issuance of $50 million in Series 2019-1 variable funding notes by a subsidiary of Servpro Industries, LLC (“Servpro”) under Servpro’s existing whole business securitization. Servpro is a provider of property cleaning and restoration services in the United States, focused primarily on restoring properties affected by water, fire, mold and other damage. King & Spalding also represented the sole structuring advisor and lead book-running manager, as well as the other initial purchasers and the committed note purchaser in the original closing of the whole business securitization in October 2019, which won International Financing Review’s North America ABS Issue of the Year award for 2019.
Aftermarket Automotive Services Securitization
In a deal that closed on July 6, King & Spalding represented the sole structuring advisor, sole book-running manager and initial purchaser in connection with the issuance of $175 million in fixed-rate notes by Driven Brands Funding, LLC and Driven Brands Canada Funding Corporation backed by the whole-business securitization of the franchise assets and the related intellectual property of the franchise brands of Driven Brands, Inc. (“Driven Brands”). Driven Brands is a leading franchisor in the aftermarket automobile services and parts distribution industries with national franchising platforms in the United States and Canada. The securitization is the seventh series of securitization notes issued by Driven Brands, each of which have been executed by King & Spalding.
Data Center & Telecom Securitizations
King & Spalding has closed several data center financings in the Spring of 2020, including a deal which closed on April 29, where King & Spalding represented the committed purchaser and funding agent in the purchase of $50 million in variable funding notes backed by a securitization of the data center assets of a major data center provider. King & Spalding has also been active in 4(a)(2) private placement of data center assets in 2020. Additionally, on July 2 King & Spalding represented a wireless communications issuer in the issuance by certain of its subsidiaries of $70 million aggregate principal amount of Secured Cellular Site Revenue Notes, Series 2020-1, backed by the revenues generated by certain wireless communications site and distributed antenna systems and other real property interests leased to companies in the wireless communications industry in the United States. The securitization is the third series of securitization notes issued by the issuer and structured by King & Spalding.
Life Science and Healthcare Loan Securitization
In a deal that closed on February 11, 2020, King & Spalding represented the sole structuring advisor and sole active bookrunner and the other initial purchasers in connection with a $368.93 million securitization of senior secured loans to life sciences and healthcare services companies. The securitized loans were originated by Oxford Finance LLC, a financial services firm that originates, underwrites, manages and finances senior secured loans exclusively to life sciences and healthcare services companies.
These transactions follow King & Spalding's representation of several major investment banks and issuers in other recent, headline, esoteric securitizations. The King & Spalding finance team for the transactions was compromised of partners Michael Urschel, Ryan McNaughton, Jonathan Arkins, Matthew Sandiford and Jeff Misher, counsel Kevin Manz and Anthony Mechcatie, senior associates Martin Eid and Katie Weiss, associates Katy Berger, Adam Ghebrekristos, Charlene Yin, Ashley Vandevender, Amber Dong and Joshua Saccurato, and senior attorney Bert Eidson, with assistance from partners Sarah Borders (bankruptcy), John Taylor (tax) and Robert Dedman (regulatory), Sam Choy (ERISA), counsel George Williams (regulatory), and project attorneys Elizabeth Fox (intellectual property) and Caroline Magee (finance).