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LBO Analysis
Circularity Off
Valuation date 6/30/2010
Acquisition share price $24.00
Exit EV / EBITDA multiple 9.4x
Exit year 5.0
Model based on 3G Capital's September 2, 2010 tender offer for all outstanding shares of Burger King Ho
Model assumes BKC pays a special dividend before the deal closes and 3G contributes 161 million in cas
Specific financing terms were unknown as of the date of this analysis.
Deal terms
Advisory fee 1%
Pay-out cash prior to closing Yes
Deal metrics
Debt 2,800.0
Leases 65.3
Other liabilities 792.5
Equity 1,500.0
IRR 19.8%
Return sensitivity to exit multiple and Revolver / Term loan cost of debt
– –
– –
– 5,329.3
– (1,625.5)
– 3,703.8
5.00% 5.50%
Exit multiple 9.4x
Term loan spread 4.75%
7.50% 8.00%
SG&A cost cutting in 2011 0.00%
Capex % of sales 7.00%
Operating and debt paydown model
Revenue assumptions
Company restaurant growth 5% (2%) 3%
Franchise growth 1% 1% 1%
Property ($ amount) 113.5 113.7 113.7
COGS assumptions
Food, paper, and product costs % sales 31% 32% 32% 31%
Payroll and employee benefits % sales 30% 31% 31% 30%
Occupancy and other costs % sales 24% 24% 25% 24%
Tax assumptions
Effective tax rate 35.3% 29.7% 34.3% 35.5%
Marginal tax rate 37.6% 37.8% 38.4% 38.4%
Debt assumptions
Cash floor 50
Cash sweep 100%
LIBOR
Credit facility interest rate 6.50%
Credit facility commitment fee 1.00%
Term loan interst rate 6.50%
Senior notes interest rate 8%
Capital lease interest rate 15% 15% 15%
Principal repayments 0
Interest on cash 1%
1% 0% 0% 0%
19% 19% 19% 19%
52% 52% 52% 52%
0 0 0 0
7% 7% 7% 7%
8.8 8.8 8.6 8.2
10% 10% 10% 10%
50 50 50 50
100% 100% 100% 100%
– – – –
419.8 423.1 426.4 429.8
0 0 0 0
- - - -
- - - -
2023.0 2295.9 2570.9 2848.1
0.0 0.0 0.0 0.0
2023.0 2295.9 2570.9 2848.1
– – – –
– – – –
– – – –
Capital leases
Beginning balance 65.3
Issuance / (repayment) –
Ending balance 65.3 65.3
Interest expense 10.1
Debt summary
Revolving credit facility 150.0 –
Term loan facility 1,750.0 1,606.6
Senior unsecured notes 900.0 900.0
Capital leases 65.3 65.3
Total 2,865.3 2,571.9
Interest expense
Revolving credit facility 5.6
Term loan facility 109.1
Senior unsecured notes 72.0
Capital leases 10.1
Total 196.8
– – – –
– – – –
– – – –
– – – –
1.5 1.5 1.5 1.5
– – – –
– – – –
– – – –
1,391.4 1,169.4 942.1 710.2
900.0 900.0 900.0 900.0
65.3 65.3 65.3 65.3
2,356.7 2,134.7 1,907.4 1,675.5
Revenue projection
For fiscal year ending June 30,
2008 2009 2010 2011
Revenues
Company restaurant 1,795.9 1,880.5 1,839.3 1,885.6
Franchise 537.2 543.4 549.2 555.3
Property 121.6 113.5 113.7 113.7
Total 2,454.7 2,537.4 2,502.2 2,554.6
Operating metrics
Revenue growth 3% (1%) 2%
EBIT margin 14% 13% 13% 15%
EBITDA margin 18% 17% 18% 20%
Profit margin 8% 8% 7% 10%
Credit metrics
Total debt 2,571.9
Net debt 2,521.9
Total debt / EBITDA 5.1x
Net debt / EBITDA 5.0x
Total debt / (EBITDA - Capex) 8.4x
EBITDA / Interest expense 2.5x
2% 2% 2% 2%
16% 16% 16% 15%
21% 21% 21% 20%
10% 10% 10% 10%