DBRS Morningstar Maintains Under Review with Negative Implications Status on FAT Brands Royalty I, LLC Ratings

DBRS, Inc. (DBRS Morningstar) maintained the Under Review with Negative Implications status on the BB (sf) and B (sf) ratings on the Class A-2 and Class B-2 Notes, respectively, issued by FAT Brands Royalty I, LLC. Both classes of securities were placed Under Review with Negative Implications on April 22, 2020, and maintained the status of Under Review with Negative Implications on July 28, 2020. For more information on the April 22, 2020, rating action, please refer to the press release titled “DBRS Morningstar Takes Rating Actions on Two FAT Brands Royalty I, LLC Securities.” For more information on the July 28, 2020, maintenance of status, please refer to the press release titled “DBRS Morningstar Maintains Under Review with Negative Implications Status on FAT Brands Royalty I.”

Maintaining the Under Review with Negative Implications status on the Notes considers DBRS Morningstar’s set of macroeconomic scenarios for select economies related to the Coronavirus Disease (COVID-19) pandemic, available in its commentary “Global Macroeconomic Scenarios: September Update,” published on September 10, 2020. DBRS Morningstar initially published macroeconomic scenarios on April 16, 2020, which were last updated on September 10, 2020, and are reflected in DBRS Morningstar’s analysis. The moderate scenario remains predicated on a more rapid return of confidence and a steady recovery heading into 2021.

DBRS Morningstar is maintaining the Under Review with Negative Implications status to observe transaction performance and company information amid the continued headwinds from the coronavirus risk to customer dining activity and restaurant operations as well as the integration of the recently acquired Johnny Rockets brand into its portfolio. Systemwide sales and same store sales have shown signs of improvement from the low levels seen at the onset of the pandemic. The threat of new business closures remains in several states that are experiencing upticks in coronavirus cases, which could potentially hamper overall reopening and revenue recovery efforts, particularly for the restaurant industry, which relies on on-premises dining as an important component to drive revenue generation. Consequently, should this trend continue, the performance of this transaction could be negatively affected.

When a rating is placed Under Review with Negative Implications, DBRS Morningstar seeks to complete its assessment and remove the rating from this status as soon as appropriate. Upon the resolution of the Under Review status, DBRS Morningstar may confirm or downgrade the ratings on the affected classes.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

This press release was amended on March 10, 2021, to reflect the U.S. ABS General Ratings Methodology (December 2018), as the previously released press release inadvertently mislabeled the methodology used.

Notes:
The principal methodology is the U.S. ABS General Ratings Methodology (December 2018), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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