OSI Restaurant investors tender $240 million 10% notes

By Susanna Moon

Chicago, March 23 - OSI Restaurant Partners, LLC said it accepted for purchase $240 million principal amount in its tender offer for the 10% senior notes due June 15, 2015 issued by the company and OSI Co-Issuer, Inc.

The tender offer expired at 5 p.m. ET on March 20.

OSI said it will pay $73 million for the notes, excluding accrued interest.

The company conditionally raised the early tender premium on March 5. If at least $184.2 million of notes were tendered in the offer, the premium would be $55 per $1,000 principal amount of notes instead of $25.

As of March 5, $134.2 million of notes had been tendered, so $50 million additional notes were needed in order to meet the minimum tender condition.

The company said it would spend up to $73 million on the offer, excluding accrued interest. This cap is based on the maximum amount of company funds OSI Restaurant is allowed to use under its senior secured credit facility for the purchase of outstanding notes.

Of the $500 million notes issued, $488.2 million principal amount remained outstanding when the offer began on Feb. 18.

The offer was conducted as a modified Dutch auction with a bid price range of $255 to $305 per $1,000 principal amount of notes. Prior to the conditional increase in the early tender premium, the bid price range was $225 to $275.

The total payment for each note will equal a base price plus a clearing premium of no more than $50. The company will also pay accrued interest up to but excluding the payment date.

The clearing premium is the lowest single bid premium that will allow the company to pay an amount equal to the tender cap.

The early tender time was 5 p.m. ET on March 10.

OSI Restaurant said the purpose of the offer was to reduce debt and improve the company's financial covenant position under its senior credit facilities.

The offer is being funded with cash on hand and the proceeds of a planned contribution of at least $47 million from the company's parent, OSI HoldCo, Inc. This contribution is expected to be funded through distributions to OSI HoldCo by one of its subsidiaries that owns about 360 restaurant properties that are sub-leased to OSI Restaurant.

The offer is conditioned on receipt of the contribution, and OSI Restaurant previously said there can be no assurance that the contribution will occur.

The dealer manager is Miller Buckfire & Co., LLC (call Adam Fitzner at 212 895-1865 or Ofir Nitzan at 212 895-1871). The depositary and information agent is D.F. King & Co., Inc. (800 431-9643 or 212 269-5550).

OSI Restaurant is a Tampa, Fla., casual dining restaurant company.

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