Domino's Pizza to tender 22% of its common stock in recapitalization plan

By Lisa Kerner

Charlotte, N.C., Feb. 7 - Domino's Pizza, Inc. said it will hold a modified Dutch auction tender offer through March 9 to purchase up to 13.85 million shares, or 22%, of its common stock at between $27.50 and $30.00 per share, for a maximum total purchase price of up to $415.5 million.

Bain Capital, LLC, which owns 27% of Domino's shares, company directors and its executive officers will not participate in the auction.

Domino's entered into a separate repurchase agreement with Bain to repurchase 1.1 million shares if the stock tender offer is fully subscribed.

The company announced equity and debt tender offers as part of an overall plan to recapitalize the company, according to a company news release.

Domino's is working with Lehman Brothers to obtain funds for the tender offer and to repay existing bank debt from a bridge loan facility through an asset-backed securitized facility for up to $1.85 billion. JP Morgan Securities Inc. and Merrill Lynch & Co. will act as joint bookrunners.

Remaining proceeds will be used to pay a "significant special cash dividend," the release stated.

The Ann Arbor, Mich., pizza delivery company is also offering to purchase its 8¼% senior subordinated notes due 2011 through Feb. 23.

"Based on the strong cash flow characteristics of our business, the appropriate corporate finance decision for our company is one that includes significant leverage," chairman and chief executive officer David A. Brandon said in the release.

"The most efficient and flexible debt we can negotiate is asset-backed securitization, which provides the lowest cost of financing available to us."

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