KBRA Assigns Preliminary Ratings to Primrose Funding, LLC, Series 2019-1

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) announces the preliminary ratings to two note classes of Primrose Funding, LLC, a whole business securitization.

This transaction represents Primrose’s first securitization. This transaction is structured as a “whole business securitization” in which Primrose School Franchising Company (“Primrose” or the “Company”) and certain of its affiliates will contribute substantially all of their revenue-generating assets to Primrose Funding, LLC (the “Issuer”). The Issuer is expected to issue $10 million of Series 2019-1, Class A-1 Notes (the “Class A-1 Notes”) and $265 million of Series 2019-1, Class A-2 Notes (the “Class A-2 Notes”, and together with the Class A-1 Notes, the “Notes”). The transaction collateral includes existing and future franchise and development agreements, curriculum and other franchise fees and securitization intellectual property. The proceeds from the offered notes will be used to refinance Primrose’s existing credit facilities, pay certain transaction expenses, make deposits into certain transaction accounts and for general corporate purposes, which may include a distribution to the Company’s equity holders.

The Primrose franchise network is a leading provider of premium early childhood education and childcare in the United States. The Primrose franchise network provides a variety of curricula including arts, mathematics, language and literacy, and social-emotional development, to customers through its system of 405 schools across 29 states, as of June 2019. For the twelve months ending June 30, 2019, the system generated system-wide sales (“SWS”) of approximately $822 million. The system is 100% franchised with over 300 franchisees, each owning, on average, approximately 1.3 schools as of June 2019.

The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in assigned ratings that differ from the preliminary ratings. KBRA will review the final operative agreements and legal opinions for the transaction prior to closing.

To access ratings, reports and disclosures, click here.

Related Publications: (available at www.kbra.com)

• Primrose Funding, LLC, Series 2019-1 Pre-Sale Report
• Global General Rating Methodology for Asset-Backed Securities
• Global Structured Finance Counterparty Methodology

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical:

Xilun Chen, Senior Director, CFA

(646) 731-2431

xchen@kbra.com

Usman Khan, Director

(646) 731-2488

ukhan@kbra.com

Abby Barkwell, Associate Director

(646) 731-3304

abarkwell@kbra.com