Arcos Dorados secures new $200 million revolving credit facility

Published 06/10/2025, 12:38
Arcos Dorados secures new $200 million revolving credit facility

MONTEVIDEO - Arcos Dorados Holdings Inc. (NYSE:ARCO), the world’s largest independent McDonald’s franchisee with a market capitalization of $1.4 billion, announced Monday it has secured a new $200 million syndicated revolving credit facility (RCF), replacing its existing facilities that totaled $75 million. According to InvestingPro data, the company operates with a significant debt burden, with a debt-to-equity ratio of 3.49.

The new facility, which remains undrawn, has a four-year maturity beginning September 30, 2025, with an optional one-year extension. Interest rates will range from SOFR plus 210 basis points to SOFR plus 240 basis points, according to a press release statement. With the stock currently trading near its 52-week low of $6.50, InvestingPro analysis suggests the company is slightly undervalued, with 8 additional key insights available to subscribers.

JPMorgan Chase Bank, N.A. served as the sole lead arranger and bookrunner for the facility, which was arranged by a syndicate of seven banks. Banco Bilbao Vizcaya Argentaria, S.A., Banco Santander (Brasil) S.A., Bank of America, N.A., and BNP Paribas acted as mandated lead arrangers, while Banco de Crédito del Perú and FirstBank Puerto Rico participated as lead managers.

"This transaction reinforces Arcos Dorados’ commitment to pursuing a solid financial strategy and reflects the continued trust and support of our long-standing banking partners," said Mariano Tannenbaum, Executive Vice President and Chief Financial Officer of Arcos Dorados.

Arcos Dorados operates more than 2,400 McDonald’s restaurants across 21 Latin American and Caribbean countries and territories, employing over 100,000 people. The company holds exclusive rights to own, operate, and grant franchises of McDonald’s restaurants in these regions. With annual revenues of $4.5 billion and trading at a P/E ratio of 10.7, the company presents an interesting value proposition. Discover comprehensive analysis and Fair Value estimates in the Pro Research Report, available exclusively on InvestingPro.

Davis Polk & Wardwell LLP provided US legal counsel for Arcos Dorados, while Milbank LLP served as US legal counsel for the lead arranger.

In other recent news, Arcos Dorados Holdings Inc reported its second-quarter 2025 earnings, revealing a notable performance with an earnings per share (EPS) of $0.13, which significantly surpassed the forecasted $0.07. Despite this earnings success, the company experienced a revenue shortfall, reporting $1.1 billion compared to the expected $1.15 billion. This earnings report highlights the company’s ability to exceed profit expectations even when revenue targets were not met. Additionally, there have been no major mergers or acquisitions announced. Analysts have not provided any recent upgrades or downgrades for Arcos Dorados. These developments reflect the company’s current financial standing and market position. Investors may find the earnings beat encouraging, though the revenue miss presents a mixed picture.

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