The shareholders of Yum Brands can expect a tasty morsel before the company separates its China business and lists it on the New York Stock Exchange, and possibly in Hong Kong.

China KFC outlet
China KFC outlet

The owner of KFC and Pizza Hut, said it will return up to $6.2 billion to shareholders before it expects to spin off Yum China by the end of 2016. It said the returned capital could take various forms, such as a share repurchase, tender offer or special dividend.

Maybe the “New Yum” should be called “Yuck.”

In the third quarter, even as the Chinese division of 6,900 restaurants brought in 54% of Yum’s overall operating profit, sales at the country’s existing restaurants fell2 in four of the last five quarters. Still, the company said it expects Yum China to see earnings per share to grow about 15% annually from 2017.

Speaking at an investor conference in Plano, Texas on Thursday, Yum Brands Chief Financial Officer Pat Grismer said Yum China had $1 billion in earnings before interest, taxes, depreciation and amortization (EBITDA) this year, and the “New Yum,” excluding China, had almost $2 billion in EBITDA this year.

The Yum business, excluding China, will have a sustained leverage ratio of about 5 times EBITDA, the company said, citing the capital return plan. At present, the company’s debt is on par with EBITDA.

After the spin-off, Yum China will pay Yum Brands a license fee of 3% percent of system sales.

The lower China royalty – compared with the global royalty rate of 4% to 6% — gives operators in the country some breathing room, analysts said.

By the end of 2017, the company expects 96% of its restaurants to be franchised, compared with 79% at the end of 2014.

Yum also said it would start testing out Taco Bell in China soon.

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