EZCorp talks $175 million five-year convertibles at 2.25%-2.75% coupon, up 30%-35%

By Rebecca Melvin

New York, June 17 – EZCorp Inc. was marketing a $175 million offering of five-year convertible notes on Tuesday that were seen pricing after the market close at a coupon of 2.25% to 2.75% and with an initial conversion premium of 30% to 35%, according to a syndicate source.

The Rule 144A deal has a $25 million greenshoe and was being sold via Morgan Stanley & Co. LLC as bookrunner with Jefferies & Co. and UBS Securities LLC as co-managers.

The notes are non-callable for five years, and in connection with the offering, EZCorp is entering into convertible note hedge and warrant transactions, or a call spread.

Proceeds will be used to pay for the call spread and to repurchase up to 1 million shares of common stock in privately negotiated transactions and to repay outstanding borrowings under the company’s revolving credit facility.

Austin, Texas-based EZCorp operates pawn stores and short-term consumer loan stores.

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