Yum Brands Names New Chairman, Raises Borrowing Limit

The board of directors of Yum! Brands Inc. (NYSE: YUM) on Tuesday named lead director Robert D. Walter as the company’s new executive chairman, replacing David C. Novak, who is retiring as executive chairman. Novak gave up his chief executive officer post last January to current CEO Greg Creed.

Walter was the founder and chairman/CEO of Cardinal Health Inc. (NYSE: CAH) until he retired from the health care company in 2008. He has been a member of Yum’s board since 2006.

CEO Greg Creed said:

We thank David Novak for his many significant contributions to Yum! Brands over the years he served as Chief Executive Officer and Chairman. His dynamic leadership created a global powerhouse restaurant company, with a world-renowned culture and a performance orientation that well-rewarded shareholders over time. As Co-Founder of the Company, he is the visionary leader who made YUM the great Company it is today, and we will forever be grateful to him as we take the business forward.

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At the same time, the company announced an increase to its unsecured loan facility of $500 million. The increase raises the total borrowing authorized under the facility to $2 billion. The current interest rate on the credit facility is equal to the Libor rate plus 1.5%. The premium may vary between 1.00% and 1.75%. The amended credit facility matures on June 8, 2016, and Yum has the option to extend maturity for up to two additional three-month periods. If the company takes advantage of the second extension, the interest margin will increase by 1% for the extended period.

Yum’s stock traded down fractionally at $76.57 in midday Wednesday. The stock’s 52-week range is $64.58 to $95.90 and the consensus price target is $84.05.