By Stephanie N. Rotondo
Seattle, June 29 – EZCorp Inc. priced a $125 million offering of convertible senior notes due 2024 at par to yield 2.875%, with an initial conversion premium of 30%, the company said in a press release on Thursday.
The deal came cheaper than the 1.875% to 2.375% yield talk but richer than the 20% to 25% premium talk.
UBS Securities LLC and Jefferies LLC are the joint bookrunners for the Rule 144A sale.
There is an $18.75 million over-allotment option.
Conversions will be settled in cash, common stock or a combination of the two, at the company’s option.
The initial conversion price is $10.00 per share, equal to an initial conversion rate of 100 shares per $1,000 of notes.
The notes are contingently convertible prior to Jan. 1, 2024. After that date, holders can convert the bonds at any time.
The convertibles become redeemable on July 6, 2021, subject to a 130% stock price hurdle.
In connection with the deal, EZCorp entered into convertible note hedge and warrant transactions with several options counterparties
Proceeds will be used to repay borrowings under a senior secured credit facility and for general corporate purposes. The company is also using the funds to retire $35 million of its outstanding 2.125% cash convertible senior notes due 2019. Additionally, proceeds could be used for potential acquisitions.
In its release, EZCorp noted that it is “in various levels of discussion regarding a number of acquisition opportunities in the U.S., Canada and Latin America, and has entered into a non-binding letter of intent to acquire pawnshops in Latin America.”
The company added that completion of any acquisitions is not guaranteed.
EZCorp is an Austin, Texas-based provider of pawn loans in the United States and Mexico.
| Issuer: | EZCorp Inc.
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| Securities: | Convertible senior notes
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| Amount: | $125 million
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| Greenshoe: | $18.75 million
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| Maturity: | July 1, 2024
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| Bookrunners: | UBS Securities LLC and Jefferies LLC
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| Coupon: | 2.875%
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| Price: | Par of $1,000
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| Yield: | 2.875%
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| Initial conversion price: | $10.00
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| Initial conversion premium: | 30%
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| Initial conversion rate: | 100
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| Provisional call: | On or after July 6, 2021 if the stock his a 130% price hurdle
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| Contingent conversion: | Yes, prior to Jan. 1, 2024
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| Net share settlement: | Yes
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| Pricing date: | June 29
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| Settlement date: | July 6
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| Distribution: | Rule 144A
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| Talk: | 1.875% to 2.375%, up 20% to 25%
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| Stock symbol: | Nasdaq: EZPW
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| Stock price: | $7.70 as of June 28 close
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| Market capitalization: | $413.98 million
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