GE Buoys Liquidity at Taco Bell Franchisee - Analyst Blog


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GE Capital, Franchise Finance, an operating unit of the General Electric Company ( GE ), recently offered a credit facility worth $80 million to BurgerBusters Inc., a franchisee of Taco Bell Corp. The transaction is expected to enhance the liquidity of BurgerBusters and facilitate its working capital requirements to drive further growth.

Based in Virginia Beach, VA, BurgerBusters owns and operates fast food restaurants for Taco Bell, one of the leading brands of the quick service restaurant (QSR) operator Yum! Brands, Inc. ( YUM ). The company also manages other Yum! Brands such as Pizza Hut and KFC franchised units throughout Virginia, North Carolina, West Virginia and Maryland.

Taco Bell is a premier Mexican-style QSR chain serving over 36 million consumers each week through 6,000 restaurants in the U.S. In addition to made-to-order and customizable tacos and burritos, it offers specialties such as the exclusive Doritos Locos Tacos, gourmet-inspired Cantina Bell Menu and lower calorie Fresco Menu through its franchisees. The franchise-centric model is a common practice in the restaurant industry as it helps to reduce volatility in earnings and enhance cash flow generation.

BurgerBusters will utilize the credit facility from GE Capital, Franchise Finance to refinance its existing debt. At the same time, it will utilize the borrowed capital to acquire more Taco Bell units in newer locations. Currently, it operates 83 Taco Bell restaurants across the region.

General Electric is one of the largest and the most diversified technology and financial services corporations in the world. With products and services ranging from aircraft engines, power generation, water processing, and security technology to medical imaging, business and consumer financing, media content and industrial products, the company serves over 100 million customers worldwide.

General Electric's segments include Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Appliances & Lighting and GE Capital. With 30 years of experience in consumer financing, GE Capital, Franchise Finance is one of the most successful retail lenders in the U.S. It primarily offers financing to mid-market operators with multiple stores in the restaurant and hospitality industries.

General Electric currently has a Zacks Rank #4 (Sell). Stocks in the industry that warrant a look include 3M Co. ( MMM ) and Mitsubishi Corp. ( MSBHY ), both of which carry a Zacks Rank #2 (Buy).

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