EZCorp talks $175 million seven-year convertible notes to yield 3.5%-4%, up 27.5%-32.5%

By Abigail W. Adams

Portland, Me., Dec. 7 – EZCorp Inc. plans to price $175 million of seven-year convertible notes after the market close on Wednesday with price talk for a coupon of 3.5% to 4% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Morgan Stanley & Co. LLC is bookrunner for the Rule 144A offering, which carries a greenshoe of $25 million.

The notes are non-callable for four years and then subject to a 130% hurdle.

They are putable upon a fundamental change.

The company will repurchase a portion of its 2.875% convertible notes due 2024 and/or its 2.375% convertible notes due 2025 in privately negotiated transactions.

Concurrently, the company may repurchase shares from convertible note purchasers in privately negotiated transactions.

Proceeds will be used to fund the convertible note and share repurchases.

Remaining proceeds will be used for general corporate purposes, which may include additional share repurchases or the repurchase, redemption or retirement of other debt, including the existing convertible notes.

EZCorp is an Austin, Tex.-based pawn shop operator.

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