Yum Brands Has Suspended its $2 Billion Buyback Program

Yum Brands, which operates brands KFC, Taco Bell, Pizza Hut, and WingStreet worldwide, except in China, has announced that it has suspended its $2 billion buyback program.

The company has tapped into a $525 million revolving credit facility as the COVID-19 pandemic has put pressure on the restaurant business.

“We have over $1 billion of cash now. Certainly we’re in a good position,” CEO David Gibbs said on CNBC. “But we want to take an abundance of caution as we manage through the challenges of this situation,” he added.

According to Gibbs, the move allows Yum Brands to provide a grace period for franchisees on royalty payments and the decision to suspend its $2 billion share buyback program allows it to better support employees and franchisees during the COVID-19 pandemic.

“We can do things like we just did in the United States, which is provide a grace period for our franchisees on their royalties or suspend capital investments for them so they can have the cash to get through this crisis,” Gibbs said on CNBC’s “Closing Bell.”

Yum Brands has tapped into a $525 million revolving credit facility, according to a regulatory filing Tuesday.

The company has “a big presence in Asia, where the virus has already impacted the market, and we’ve had this great ability to leverage the learnings from that market and take those to the other markets as they start experiencing a little bit of this crisis,” Gibbs additionally said.

Gibbs said employees at restaurants operated by Yum Brands will continue to be paid if they are closed due to government mandates. “We know that is the right thing to do. We’re working with our franchisees to take a similar approach,” he added.

Shares of the stock are down over 27% this year.

Disclaimer: We have no position in Yum! Brands, Inc. (NYSE: YUM) and have not been compensated for this article.