Cheesecake Factory talks $300 million five-year convertibles to yield 0.5%-1%, up 32.5%-37.5%

By Abigail W. Adams

Portland, Me., June 10 – The Cheesecake Factory Inc. plans to sell $300 million of five-year convertible notes after the market close on Thursday with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

J.P. Morgan Securities LLC, BNP Paribas Securities Corp., BofA Securities Inc. and Wells Fargo Securities LLC are bookrunners for the registered offering, which carries a greenshoe of $45 million.

The notes will be settled in cash up to the principal amount with the remaining to be settled in cash, shares or a combination of both at the company’s option.

Concurrently, the company plans to price a secondary offering of $175 million in common stock. The secondary offering carries a greenshoe of $26.25 million.

In connection with the offerings, the company will repurchase 150,000 shares of its series A convertible preferred stock for $447 million in cash. Holders of the remaining 50,000 outstanding shares of the convertible preferred stock will convert them into common stock and receive $10.4 million in cash.

Approximately $457.4 million of net proceeds from the concurrent offerings will be used to fund the repurchase and conversion of the company’s series A convertible preferred stock. Remaining proceeds will be used for general corporate purposes.

The Cheesecake Factory is a Calabasas Hills, Calif.-based restaurant chain.

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