KBRA Assigns Preliminary Ratings to Driven Brands Funding, LLC – Series 2019-2 Senior Secured Notes
NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) announces the preliminary ratings to a note class of Driven Brands Funding, LLC, a whole business securitization.
Driven Brands, Inc. (“Driven Brands” or the “Company”) completed its first whole business securitization in July 2015. The transaction structure is a master trust, and the Series 2019‑2, Class A-2 Notes represent the Company’s fifth securitization within the trust. Driven Brands Funding, LLC (the “Issuer”) is expected to issue $275 million of Class A-2 Notes (pari passu with the Series 2015-1 A-2 Notes, Series 2016-1 A-2 Notes, Series 2018-1 A-2 Notes and Series 2019-1 A-2 Notes). The Company will not be contributing new collateral in connection with this transaction.
KBRA will be affirming the ratings on the Issuer’s Outstanding Notes at transaction close. The affirmation will reflect collateral performance, which is expected to be in line with KBRA’s rating scenarios, and the expectation that the Outstanding Notes will continue to pass their respective rating level stresses with the addition of the Series 2019-2 Notes.
Driven Brands is one of the largest franchisors in the aftermarket automobile services and parts distribution industries. The Company franchises, owns, operates and manages locations under the core brands of CARSTAR, Maaco, Meineke, 1-800-Radiator & A/C and Take 5 Oil Change. The collateral consists of all existing and future franchise agreements in the United States, royalties from existing and future company-operated locations, product sourcing agreements, existing and future collections and profits from company-operated Take 5 locations, related intellectual property and a license fee from Canadian franchises. As of June 29, 2019, the portfolio comprised of 2,319 franchise locations and 383 company-owned locations, most of which are Take 5 locations. The collateral for the offered notes also includes, to a lesser degree, franchises that operate under the Merlin, Pro Oil Change, Econo-Lube N’ Tune, Aero Colours, Drive N Style, and AutoQual brand names. The Company has a network of approximately 2,700 locations across 49 states and ten Canadian provinces.
KBRA analyzed the transaction using the Global General Rating Methodology for Asset-Backed Securities published on November 28, 2017. and the Global Structured Finance Counterparty Methodology published on August 8, 2018. KBRA also conducted an on-site operational review of Driven Brands at its Charlotte, NC headquarters in March 2018 and has met with the Company for updates. KBRA will review the final operative agreements and legal opinions for the transaction prior to closing.
For complete details on the analysis, please see KBRA’s Pre-Sale Report, “Driven Brands Funding, LLC, Series 2019-2”, which was published at www.kbra.com.
The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.
Preliminary Ratings Assigned: Driven Brands Funding, LLC – Series 2019-2 Senior Secured Notes
Initial Principal Balance
To access ratings, reports and disclosures, click here.
Related Publications: (available at www.kbra.com)
- Driven Brands Funding LLC, Series 2019-2 Pre-Sale Report
- Global General Rating Methodology for Asset-Backed Securities
- Global Structured Finance Counter Party Methodology
About KBRA and KBRA Europe
KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
Xilun Chen, Senior Director
Zara Shirazi, Director
Shane Olaleye, CFA, Associate Director
Michael Lepri, Associate Director