Alsea offers price guidance on €300M, 5-year euro high-yield debut

Mexico-based casual dining and coffee shop chain Alsea SAV de CV is out with price guidance of 5.75% area on €300 million of five-year (non-call two-year) unsecured notes, from initial price thoughts earlier today in the high-5% range. Books have reached more than €650 million and are subject at 2:30 p.m. London time, for pricing thereafter via global coordinators BofA Securities, ING (B&D), Santander and Societe Generale.

Along with initial price thoughts earlier today, the deal was upsized from the €275 million initially targeted.

The deal will be issued through Alsea’s 77% owned Spanish subsidiary Food Service Project SA and marks the firm’s European high-yield debut. Alsea said it had mandated banks to arrange fixed income calls earlier this week. Proceeds from the leverage-neutral transaction will be used to refinance bank debt, mostly targeting euro-denominated syndicated loans.

The parent company issued its first international bond deal in December 2021, raising $500 million of 7.75% unsecured notes due 2026, which closed Jan. 12 at 102.05 for a 7.138% yield, according to S&P Global Market Intelligence data.

Covenants for the bonds are substantially similar to its dollar offering, and the notes will benefit from the same guarantees as its outstanding debt, plus additional guarantees from European subsidiaries. Bain Capital is a substantial minority shareholder in the Spanish subsidiary with a 10.53% stake owned indirectly via Britannia Investments it acquired in October 2021.

Ratings have been confirmed in line with parent company ratings at B1 from Moody's and BB- by Fitch. Alsea was severely impacted by COVID-19, but its revenue has increased by 34.7% versus 2020 levels for the first nine months of last year, Fitch notes.

Fitch predicts Alsea's debt to EBITDA and total lease-adjusted debt to EBITDAR should be between 5.3x and 5.6x for 2021. The parent company reported revenue of $2.3 billion for the 12 months ended September 2021.

Mexico-headquartered Alsea operates across Latin America and Europe. It is active in the fast-food, coffee shop, casual, fast casual and family dining sectors, and its brands include Starbucks, Domino's and Burger King.

CaixaBank, Rabobank, Sabadell and Scotiabank are joint passive bookrunners.