7-Eleven, Inc. completed its third yen-denominated securitization via Citigroup Corporate & Investment Bank in December. According to Citigroup, the 10 billion ($74.3 million) royalty-backed future flow provides cost-effective funding and eliminates foreign exchange risk.
The transaction is non-recourse to 7-Eleven and will be repaid from future yen royalties received by 7-Eleven from Seven-Eleven Japan Co. Ltd, pursuant to a master license agreement. The deal provides 10-year financing for 7-Eleven at a historically low fixed-interest rate of 1.8%.
Additionally, the transaction provides an economic foreign exchange hedge, as it allows 7-Eleven access to a new investor base by monetizing the excess royalties from the company’s previous transaction, which was completed in 1998, in conjunction with future royalties that will be paid after the termination of the 1998 transaction.
While Citigroup was the sole arranger in the transaction, Citibank, N.A. Tokyo acted as a global distributor. Furthermore, the participating investor group included Westdeutsche Landesbank as the lead manager and The Dai-ichi Mutual Life Insurance Co. and Mitsui Sumitomo Insurance Co. Ltd as managers.
