Burger King Files for IPO

Bill Sjostrom —  16 February 2006

Burger King Holdings, Inc. filed a registration statement with the SEC today for the sale of $400 million of common stock (click here). While the prospectus does not include a price range or specify how many shares will be sold by BK vs. existing shareholders, it does contain a number of tidbits, including the following:

• BK has enjoyed seven consecutive quarters of positive comparable sales growth in the United States.

• For fiscal 2005, BK had revenues of $1.94 billion, net income of $47 million, and cash from operating activities of $218 million.

• The BK brand represents 36% of the total assets on BK’s balance sheet.

• 90% of BK restaurants are franchises.

• BK has $1.35 billion is outstanding debt.

• It looks like all of the IPO proceeds will be used to pay down debt.

• BK will be listed on the NYSE under the symbol BKC

• The group of three private equity funds that currently own 95% of BK (the prospectus refers to them as “sponsors�) will retain a majority stake post IPO. Hence, BK will qualify as a “controlled company� under NYSE rules and therefore will not have to comply with various corporate governance standards.

• The sponsors will be party to a post-IPO shareholders agreement providing for the right of each sponsor to appoint two members to the BK board and certain drag-along, tag-along, and registration rights.

As early reported, BK borrowed $350 million so that it can pay a $367 million cash dividend (95% of which will go to the sponsors) on February 21, 2006. BK will also pay $33 million to holders of BK options and restricted stock unit awards, primarily members of senior management, which we refer to as a compensatory make-whole payment. Additionally, BK agreed to pay a one-time $30 million fee to terminate its management agreement with the sponsors upon completion of the IPO.