Apollo’s CKE Sells $1.05 Billion Asset-Backed Debt TransactionSarah Mulholland
Apollo Global Management LLC’s CKE Restaurants Inc., the parent of Carl’s Jr. and Hardee’s, sold $1.05 billion of bonds linked to the company’s assets, including franchise fees.
CKE issued 6.6 year debt rated BBB- by Standard & Poor’s yielding 4.50 percent, the person said. This deal marks the first so-called whole-business, asset-backed offering for the Carpinteria, California-based company, according to a person familiar with the transaction, who asked not to be identified because terms aren’t public.
Companies have sold about $50 billion in bonds tied to consumer and business borrowing this year, with deals linked to automobiles accounting for $21 billion in sales, according to data compiled by Bloomberg. Issuance of deals that reference unusual collateral such as franchisee fees, wireless cell phone towers and timeshare payments are poised to climb as investors seek out riskier assets with the Federal Reserve holding its benchmark lending rate close to zero into a fifth year.
American Tower Corp., the owner and operator of wireless and broadcast communications sites, sold $1.8 billion of securities tied to wireless towers on March 6, Bloomberg data show. The 10-year portion of the sale ranked AAA priced to yield 3.089 percent, the data show.
Ford Motor Co. sold 2.71-year bonds rated BBB linked to auto debt, the largest part of the asset-backed market, to yield 1.797 percent on March 12, Bloomberg data show.
Other companies that have tapped the asset-backed market to fund their businesses with transactions similar to CKE’s include Sonic Corp. and Domino’s Pizza Inc., the data show.
So-called esoteric asset-backed deals, which are offerings linked to collateral outside of the auto loans, credit-cards and student loans that have traditionally accounted for the bulk of sales, gained attention in 1997 when banks arranged $55 million of so-called Bowie Bonds, tied to royalties from rock icon David Bowie. Other musicians that have tapped the asset-backed market for cash include James Brown and the Isley Brothers, according to Moody’s.
Columbia Lake Acquisition Holdings Inc., an affiliate of Leon Black’s Apollo, acquired CKE in July 2010, according to a statement. Barclays Plc arranged the transaction for CKE, the person said.