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Buffets Holdings issues 13 7/8% discount notes in exchange for buyback option
New York, Dec. 29 - Buffets Holdings, Inc. said it has issued 13 7/8% senior discount notes due 2010 as payment for a buyback option on its existing 13 7/8% senior discount notes due 2010 under an agreement with two groups of holders of the notes.
Between them, the two groups own more than 80% of the outstanding notes.
The new discount notes were issued via Buffets Restaurants Holdings, Inc., a newly formed holding company that now owns more than 99% of Buffets Holdings, Inc. The existing notes were issued by Buffets Holdings, Inc.
Investors who participated in the agreement received new notes with an initial accreted value equal to 10% of the accreted value of the Buffets Holdings senior discount notes.
Under the terms of the option, Buffets Restaurants Holdings can buy the Buffets Holdings notes for a year, expiring on Dec. 29, 2006.
The cash exercise price for the option is the accreted value of the Buffets Holdings senior discount notes plus half the make-whole premium on the notes, less the initial accreted value of Buffets Restaurants Holdings senior discount notes issued as payment for the option. The make-whole premium is based on the first redemption price and a discount rate of Treasuries plus 50 basis points.
Under the option agreement, Buffets Restaurants Holdings can require the noteholders to tender their notes if Buffets Holdings makes a cash tender offer for all of its outstanding senior discount notes that is economically equivalent to the option payment and the exercise price.
Up to Jan. 31, Buffets Restaurants Holdings has agreed to enter into similar option agreements with other noteholders, subject to certain conditions.
Buffets is an Eagan, Minn., restaurant operator.
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