Item 1.01 Entry into a Material Definitive Agreement.
General
On June 22, 2021 (the "Closing Date"), Wendy's Funding, LLC (the "Master
Issuer"), a limited-purpose, bankruptcy-remote, wholly owned indirect subsidiary
of The Wendy's Company (the "Company"), completed its previously announced
refinancing transaction and issued $450 million of its Series 2021-1 2.370%
Fixed Rate Senior Secured Notes, Class A-2-I (the "Class A-2-I Notes") and
$650 million of its Series 2021-1 2.775% Fixed Rate Senior Secured Notes,
Class A-2-II (the "Class A-2-II Notes" and, together with the Class A-2-I Notes,
the "Class A-2 Notes"), in an offering exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"). In connection with
the issuance of the Class A-2 Notes, the Master Issuer also entered into a
revolving financing facility of Series 2021-1 Variable Funding Senior Secured
Notes, Class A-1 (the "Variable Funding Notes"), which allows for the drawing of
up to $300 million under the Variable Funding Notes, which include certain
credit instruments, including a letter of credit facility. The Class A-2 Notes
and the Variable Funding Notes are referred to collectively as the "Notes." The
Notes were issued in a privately placed securitization transaction pursuant to
which certain of the Company's domestic and foreign revenue-generating assets,
consisting principally of franchise-related agreements, real estate assets, and
intellectual property and license agreements for the use of intellectual
property, are held by the Master Issuer and certain other limited-purpose,
bankruptcy remote, wholly-owned indirect subsidiaries of the Company that act as
Guarantors (as defined below) of the Notes and that have pledged substantially
all of their assets, excluding certain real estate assets and subject to certain
limitations, to secure the Notes.
The Notes were issued under a Base Indenture dated June 1, 2015, a copy of which
is attached to the Company's Current Report on Form 8-K filed June 2, 2015 as
Exhibit 4.1 (the "Base Indenture"), and the related supplemental indenture dated
June 22, 2021, a copy of which is attached to this Current Report on Form 8-K as
Exhibit 4.1 (the "Series 2021-1 Supplement" and, collectively with the Base
Indenture, the First Supplement to the Base Indenture dated February 10, 2017, a
copy of which is attached to the Company's Annual Report on Form 10-K filed
March 2, 2017 as Exhibit 4.3, the Second Supplement to the Base Indenture dated
January 17, 2018, a copy of which is attached to the Company's Current Report on
Form 8-K filed January 17, 2018 as Exhibit 4.2, the Third Supplement to the Base
Indenture dated February 4, 2019, a copy of which is attached to the Company's
Annual Report on Form 10-K filed February 27, 2019 as Exhibit 4.6, the Fourth
Supplement to the Base Indenture dated June 26, 2019, a copy of which is
attached to the Company's Current Report on Form 8-K filed June 26, 2019 as
Exhibit 4.2, the Fifth Supplement to the Base Indenture dated June 17, 2020, a
copy of which is attached to the Company's Current Report on Form 8-K filed
June 18, 2020 as Exhibit 4.2, the Sixth Supplement to the Base Indenture dated
January 3, 2021, a copy of which is attached to the Company's Annual Report on
Form 10-K filed March 3, 2021 as Exhibit 4.11, and the Seventh Supplement to the
Base Indenture (as defined below), a copy of which is attached to this Current
Report on Form 8-K as Exhibit 4.2, the "Indenture"), each between the Master
Issuer and Citibank, N.A., as trustee (in such capacity, the "Trustee") and
securities intermediary. The Base Indenture allows the Master Issuer to issue
additional series of notes in the future subject to certain conditions.
On June 22, 2021, the Master Issuer and the Trustee entered into a Seventh
Supplement to the Base Indenture (the "Seventh Supplement to the Base
Indenture") for the purpose of amending certain provisions of the Base
Indenture, including but not limited to the following: (i) to allow for the
basket in the Indenture that permits the Securitization Entities (as defined
below) to guarantee the indebtedness of franchisees to be used for guarantees of
indebtedness more generally; (ii) to modify the conditions to the issuance by
the Master Issuer of any additional notes to (x) increase the maximum Senior ABS
Leverage Ratio (as such term is defined in the Indenture) that may be in effect
as of the closing date of such issuance, after giving pro forma effect to the
issuance of such additional notes and any repayment of existing indebtedness
from such additional notes, from 6.5x to 7.0x and (y) increase the maximum
Holdco Leverage Ratio (as such term is defined in the Indenture) that may be in
effect as of the closing date of such issuance, after giving effect to the
issuance of such additional notes and any repayment of existing indebtedness
from such additional notes, from 7.0x to 7.5x; and (iii) to provide that it will
be an event of default under the Indenture if a Debt Service Advance or a
Collateral Protection Advance (as such terms are defined in the Indenture) shall
have been outstanding for ninety (90) or more consecutive days. The amendment
described in clause (i) became effective on the Closing Date, the amendment
described in clause (ii) will become effective on the earlier of (x) the Control
Party (as such term is defined in the Indenture) designating a date for
implementation and (y) the
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repayment in full of all of the Master Issuer's Series 2018-1 3.884% Fixed Rate
Senior Secured Notes, Class A-2-II (the "Series 2018-1 Class A-2-II Notes"),
Series 2019-1 3.783% Fixed Rate Senior Secured Notes, Class A-2-I (the "Series
2019-1 Class A-2-I Notes"), and Series 2019-1 4.080% Fixed Rate Senior Secured
Notes, Class A-2-II (the "Series 2019-1 Class A-2-II Notes" and together with
the Series 2019-1 Class A-2-I Notes, the "Series 2019 1 Class A-2 Notes"), and
the amendment described in clause (iii) will become effective upon the repayment
in full of all of the Series 2018-1 Class A-2-II Notes and Series 2019-1
Class A-2 Notes.
Class A-2 Notes
Interest and principal payments on the Class A-2 Notes are payable on a
quarterly basis. The requirement to make such quarterly principal payments on
the Class A-2 Notes is subject to certain financial conditions set forth in the
Indenture. The legal final maturity date of the Notes is June 2051, but, unless
earlier prepaid to the extent permitted under the Indenture, the anticipated
repayment dates of the Class A-2-I Notes and the Class A-2-II Notes will be
March 2029 and June 2031, respectively. If the Master Issuer has not repaid or
refinanced the Class A-2 Notes prior to the respective anticipated repayment
date, additional interest will accrue on each tranche of the Class A-2 Notes at
a rate equal to the greater of (A) 5.00% per annum and (B) a per annum interest
rate equal to the amount, if any, by which the sum of (i) the yield to maturity
(adjusted to a quarterly bond-equivalent basis) on such anticipated repayment
date of the United States Treasury Security having a term closest to 10 years,
plus (ii) 5.00%, plus (iii)(1) with respect to the Series 2021-1 Class A-2-I
Notes, 1.15%, and (2) with respect to the Series 2021-1 Class A-2-II Notes,
1.35%, exceeds the original interest rate with respect to such tranche.
The Notes are secured by the collateral described below under "Guarantees and
Collateral."
Variable Funding Notes
In connection with the issuance of the Class A-2 Notes, the Master Issuer also
entered into a revolving financing facility consisting of Variable Funding
Notes, which allows for the drawing of up to $300 million under the Variable
Funding Notes, which includes certain credit instruments, including a letter of
credit facility. The Variable Funding Notes were issued under the Indenture and
allow for drawings on a revolving basis. Drawings and certain additional terms
related to the Variable Funding Notes are governed by the Class A-1 Note
Purchase Agreement, dated June 22, 2021 (the "Variable Funding Note Purchase
Agreement"), a copy of which is attached hereto as Exhibit 10.1, by and among
the Master Issuer, the Guarantors (as defined below), Wendy's International,
LLC, as manager (the "Manager"), certain conduit investors, financial
institutions and funding agents, and Coöperatieve Rabobank, U.A., New York
Branch, as provider of letters of credit, as swingline lender and as
administrative agent. The Variable Funding Notes will be governed by both the
Variable Funding Note Purchase Agreement and the Indenture. Depending on the
type of borrowing under the Variable Funding Notes, interest on the Variable
Funding Notes will be based on (i) the prime rate, (ii) overnight federal funds
rates, (iii) the London interbank offered rate for U.S. Dollars (or a
replacement index rate selected in accordance with the terms of the Variable
Funding Note Purchase Agreement) or (iv) with respect to advances made by
conduit investors, the weighted average cost of, or related to, the issuance of
commercial paper allocated to fund or maintain such advances, in each case plus
any applicable margin, as more fully set forth in the Variable Funding Note
Purchase Agreement. While the Master Issuer does not anticipate drawing on the
Variable Funding Notes on the Closing Date, the Master Issuer expects to have
approximately $26.2 million in undrawn letters of credit issued under the
Variable Funding Notes on the Closing Date. There is a commitment fee on the
unused portion of the Variable Funding Notes facility, which ranges from 40
basis points to 75 basis points based on the utilization under the Variable
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above is hereby incorporated by
reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are being filed with this Current Report on Form 8-K.
Exhibit
No. Description
4.1 Series 2021-1 Supplement to Base Indenture, dated as of June 22,
2021, by and between Wendy's Funding, LLC, as Master Issuer of the
Series 2021-1 fixed rate senior secured notes, Class A-2, and Series
2021-1 variable funding senior notes, Class A-1, and Citibank, N.A.,
as Trustee and Series 2021-1 Securities Intermediary.
4.2 Seventh Supplement to the Base Indenture, dated as of June 22, 2021,
by and between Wendy's Funding, LLC, as Master Issuer, and Citibank,
N.A., as Trustee and Securities Intermediary.
10.1 Class A-1 Note Purchase Agreement, dated as of June 22, 2021, by and
among Wendy's Funding, LLC, as Master Issuer, each of Quality Is Our
Recipe, LLC, Wendy's Properties, LLC and Wendy's SPV Guarantor, LLC,
as Guarantors, Wendy's International, LLC, as Manager, the conduit
investors party thereto, the financial institutions party thereto,
certain funding agents, and Coöperatieve Rabobank, U.A., New York
Branch, as L/C Provider, Swingline Lender and Administrative Agent.
10.2 Fourth Amendment to the Management Agreement, dated as of June 22,
2021, by and among Wendy's Funding, LLC, as Master Issuer, certain
subsidiaries of Wendy's Funding, LLC party thereto, Wendy's
International, LLC, as Manager, and Citibank, N.A., as Trustee.
104 Cover Page Interactive Data File (the cover page XBRL tags are
embedded within the Inline XBRL document).
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