Jack in the Box Inc. (JACK) has determined that changing its capital structure is its best move to enhance shareholder value.
The San Diego-based fast-food chain said Wednesday it will pursue a securitization as a standalone company following a review of strategic alternatives. In December, the company said it would complete a strategic review and that it had even talked to buyers about a potential sale.
The securitization would replace its current term loan and revolving line of credit, Jack in the Box said. Proceeds from the new debt would be used to repay the company's existing credit facility, related refinancing costs and other corporate expenses, the company said.
Jack in the Box also said it intends to resume share repurchases after the securitization is complete. It is targeting having a debt ratio of about five times earnings before interest, taxes, depreciation and amortization.
Jack in the Box, whose 2,200 locations span all across the U.S. and sells food such as tacos, burgers, salads and shakes, had about $1.01 billion in long-term debt, according to the company's most recent quarterly report.
The company completed the sale of its burrito fast-food chain Qdoba in March 2018 for about $305 million in cash to private-equity firm Apollo Global Management.
Activist investors also hold stakes in Jack in the Box. Blue Harbour Group LP and Jana Partners LLC have a combined roughly 11% stake in the company, according to FactSet. Jack in the Box reached a settlement with Jana to add two board members.
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