Arcos Dorados Starts Takeout Talks

Arcos Dorados the private holdco for the McDonald’s LatAm franchise, has started to discuss ways of extending the maturity on its debt, its CEO tells LatinFinance. “We have started going around to bankers talking about our options, including bonds,” says Woods Staton, Arcos’ main shareholder and CEO. But the executive says Arcos is in no big hurry, and would only press ahead with a bond takeout once markets stabilize. The company secured a $350m 5-year final, 3-year average life loan in Q408 via Santander, Scotia and Bradesco at Libor plus 425bp. “The rate we have now is pretty competitive,” adds Staton. Arcos had previously considered local bond issuance in some of its more liquid markets like Brazil, Mexico and Puerto Rico. But that alternative turned out to be more complicated than simply raising a holdco loan denominated in dollars. Any upcoming bond is likely to involve the banks that led the loan. Arcos is 60% held by a private equity consortium that includes Gavea Investimentos, Capital Group and DLJ South American Partners. Staton says the investor group has no plans to change the shareholder structure, and that all involved have been very happy with the investment so far. An executive at one of the shops agrees, calling Arcos one of his best performing assets. The company says it has since August had to adjust growth forecasts down with the worsening economy. It is considering pushing into new markets where McDonald’s is not yet established, including Jamaica, Trinidad & Tobago, and Bolivia.