XML 29 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
Short-term Borrowings and Long-term Debt
 9 Months Ended
Sep. 30, 2017
Debt Disclosure [Abstract]  
Short-term Borrowings and Long-term Debt Short-term Borrowings and Long-term Debt

Short-term Borrowings
 
9/30/2017
 
12/31/2016

Current maturities of long-term debt
 
$
383

 
$
66

Other
 
—

 
8

 
 
$
383

 
$
74

Less current portion of debt issuance costs and discounts
 
(11
)
 
(8
)
Short-term borrowings
 
$
372

 
$
66

 
 
 
 
 
Long-term Debt
 
 
 
 
Securitization Notes
 
$
2,277

 
$
2,294

Subsidiary Senior Unsecured Notes
 
2,850

 
2,100

Revolving Facility
 
35

 
—

Term Loan A Facility
 
500

 
500

Term Loan B Facility
 
1,980

 
1,990

YUM Senior Unsecured Notes
 
2,200

 
2,200

Capital lease obligations
 
119

 
120

 
 
$
9,961

 
$
9,204

Less debt issuance costs and discounts
 
(99
)
 
(79
)
Less current maturities of long-term debt
 
(383
)
 
(66
)
Long-term debt
 
$
9,479

 
$
9,059



On March 21, 2017, KFC Holding Co., Pizza Hut Holdings, LLC, a limited liability company, and Taco Bell of America, LLC, a limited liability company, each of which is a wholly-owned subsidiary of the Company, as co-borrowers (the “Borrowers”) completed the repricing of the then existing $1.99 billion under the Term Loan B Facility pursuant to an amendment to the Credit Agreement (as defined in our 2016 Form 10-K). The amendment reduces the interest rate applicable to the Term Loan B Facility by 75 basis points to LIBOR plus 2.00%, with an additional rate stepdown to LIBOR plus 1.75% in the event the secured net leverage ratio (as defined in the Credit Agreement) is less than 1 to 1. As a result of repricing the Term Loan B Facility, $192 million in principal was assigned to new lenders or existing lenders electing to increase their holdings in the loan. The maturity date and all other material provisions under the Credit Agreement remained unchanged as a result of this amendment.

On June 7, 2017, the Borrowers completed the repricing of the existing $500 million under the Term Loan A Facility and $1 billion under the Revolving Facility pursuant to an amendment to the Credit Agreement. The amendment reduced the interest rate applicable to the Term Loan A Facility and for borrowings under the Revolving Facility by 75 basis points. Subsequent to the repricing the interest rate ranges from 1.25% to 1.75% plus LIBOR or from 0.25% to 0.75% plus the Base Rate, at the Borrower’s election, based upon the total net leverage ratio of the Borrowers and the Specified Guarantors (as defined in the Credit Agreement). As a result of repricing the Term Loan A Facility, $146 million in principal was assigned to new lenders or existing lenders electing to increase their holdings in the loan. There was no change in lender participation in the Revolving Facility. The maturity date for the Term Loan A Facility and the Revolving Facility has been extended to June 7, 2022. Amortization payments on the Term Loan A Facility will begin one full fiscal quarter after the first anniversary of the amendment effective date, which delays the original amortization schedule by approximately one year. All other material provisions under the Credit Agreement remained unchanged.

As a result of these repricing transactions, $23 million of fees were capitalized as debt issuance costs and are included primarily within Long-term debt on our Condensed Consolidated Balance Sheet as of September 30, 2017. During the year to date ended September 30, 2017, $8 million of fees and unamortized debt issuance costs were recognized within Interest expense, net due to these repricings.

On June 15, 2017, the Borrowers issued $750 million aggregate principal amount of 4.75% Senior Notes due June 1, 2027 (the “2027 Notes”). Interest on the 2027 Notes is payable semi-annually in arrears on June 1 and December 1, beginning on December 1, 2017. The 2027 Notes are guaranteed on a senior unsecured basis by (i) the Company, (ii) the Specified Guarantors and (iii) by each of the Borrower’s and the Specified Guarantors’ domestic subsidiaries that guarantee the Borrower’s obligations under the Credit Agreement, except for any of the Company’s foreign subsidiaries. The indenture governing the Notes contains covenants and events of default that are customary for debt securities of this type. In connection with the issuance of the 2027 Notes, the Company paid debt issuance costs of $9 million. These issuance costs are primarily recorded as a reduction in Long-term debt
on our Condensed Consolidated Balance Sheet.

Subsequent to the quarter end, on October 16, 2017 Taco Bell Funding, LLC terminated the revolving financing facility of Series 2016-1 Senior Notes, Class A-1, which allowed for the borrowing of up to $100 million including the issuance of up to $50 million in letters of credit.
 
Details of our short-term borrowings and long-term debt as of December 31, 2016 can be found within our 2016 Form 10-K. Cash paid for interest during the years to date ended September 30, 2017 and 2016 was $275 million and $150 million, respectively.