LEBANON, Tenn., June 16, 2021 /PRNewswire/ -- Cracker Barrel Old
Country Store, Inc. ("Cracker Barrel" or the "Company") (Nasdaq:
CBRL), today announced the pricing of its offering of $275 million aggregate principal amount of 0.625%
convertible senior notes due 2026 (the "notes") in a private
offering only to persons reasonably believed to be qualified
institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended (the "Securities Act"). Cracker Barrel also
granted the initial purchasers of the notes an option to purchase,
for settlement within a period of 13 days from, and including, the
date notes are first issued, up to an additional $25 million aggregate principal amount of notes
in the private placement. The issuance and sale of the notes are
scheduled to settle on or about June 18,
2021, subject to customary closing conditions.
The notes will be senior, unsecured obligations of Cracker
Barrel and will accrue interest at a rate of 0.625% per annum,
payable semi-annually in arrears on June 15 and December
15 of each year, beginning on December
15, 2021. The notes will mature on June 15, 2026, unless earlier repurchased,
redeemed or converted. The notes will be convertible by the
noteholders prior to the close of business on the business day
immediately preceding December 15,
2025 only under certain circumstances and during certain
periods, and irrespective of those circumstances, will be
convertible by the noteholders on or after December 15, 2025 until the close of
business on the second scheduled trading day immediately preceding
the maturity date. The initial conversion rate will be
5.3153 shares of Cracker Barrel's common stock per
$1,000 principal amount of notes
(equivalent to an initial conversion price of approximately
$188.14 per share of Cracker
Barrel's common stock, which represents a premium of 25% over the
last reported sale of $150.51 per share of Cracker Barrel's common
stock on June 15, 2021), subject to
adjustment in certain circumstances. Upon conversion, the notes may
be settled, at Cracker Barrel's election, in cash, and, if
applicable, shares of Cracker Barrel's common stock.
The notes will also be redeemable, in whole or in part, for cash
at Cracker Barrel's option at any time on or after June 15, 2024 and on or before the 25th scheduled
trading day immediately before the maturity date, in certain
circumstances at a redemption price equal to the principal amount
of the notes to be redeemed, plus accrued and unpaid interest, if
any, to, but excluding, the redemption date, but only if the last
reported sale price per share of Cracker Barrel's common stock
exceeds 130% of the conversion price on (1) each of at least 20
trading days, whether or not consecutive, during the 30 consecutive
trading days ending on, and including, the trading day immediately
before the date Cracker Barrel sends the related redemption notice;
and (2) the trading day immediately before the date it sends such
notice. In addition, if a "fundamental change" (as
defined in the indenture for the notes) occurs, then, subject to a
limited exception, noteholders may require Cracker Barrel to
repurchase their notes for cash for a repurchase price equal to the
principal amount of the notes to be repurchased, plus accrued and
unpaid interest, if any, to, but excluding, the applicable
repurchase date.
Cracker Barrel estimates that the net proceeds from the offering
will be approximately $266.8 million
(or approximately $291.1 million if
the initial purchasers fully exercise their option to purchase
additional notes), after deducting the initial purchasers'
discounts and commissions and estimated offering expenses. Cracker
Barrel intends to use approximately $27.8 million of the net proceeds to fund
the cost of entering into the convertible note hedge transactions
described below (after such cost is partially offset by the
proceeds from entering into the warrant transactions described
below) and the remaining proceeds for the repayment of a portion of
the indebtedness outstanding under Cracker Barrel's revolving
credit facility and general corporate purposes. In addition,
Cracker Barrel expects to repurchase 232,543 shares of its common
stock with an aggregate value of approximately $35 million through privately negotiated
transactions effected through one of the initial purchasers or its
affiliates, as Cracker Barrel's agent. These concurrent
repurchases of shares of Cracker Barrel's common stock may result
in the common stock trading at prices that are higher than would be
the case in the absence of these repurchases.
If the initial purchasers exercise their option to purchase
additional notes, then Cracker Barrel intends to use a portion of
the additional net proceeds to fund the cost of entering into
additional convertible note hedge transactions as described below
(after such cost is partially offset by the proceeds from entering
into the additional warrant transactions described below).
In connection with the pricing of the notes, Cracker Barrel
entered into privately negotiated convertible note hedge
transactions with one or more of the initial purchasers or their
respective affiliates and/or other financial institutions (the
"hedge counterparties"). These transactions will cover, subject to
anti-dilution adjustments substantially similar to those applicable
to the notes, the aggregate number of shares of Cracker Barrel's
common stock that will initially underlie the notes, and are
expected generally to reduce or offset the potential dilution to
Cracker Barrel's common stock, and/or offset any cash payments in
excess of the principal amount due, as the case may be, upon
conversion of the notes.
Cracker Barrel also entered into separate, privately-negotiated
warrant transactions with the hedge counterparties relating to the
same number of shares of Cracker Barrel's common stock, subject to
customary anti-dilution adjustments, pursuant to which Cracker
Barrel will sell warrants to the hedge counterparties. The warrants
could have a dilutive effect on Cracker Barrel's common stock to
the extent that the market value per share of Cracker Barrel's
common stock exceeds the strike price of those warrants. The strike
price of the warrants will initially be $263.3925 per share, which represents a premium
of 75% over the per share closing price of Cracker Barrel's common
stock on June 15, 2021, and is
subject to certain adjustments under the terms of the warrant
transactions.
If the initial purchasers exercise their option to purchase
additional notes, Cracker Barrel expects to enter into additional
convertible note hedge transactions and additional warrant
transactions with the hedge counterparties, which will initially
cover the number of shares of Cracker Barrel's common stock that
will initially underlie the additional notes sold to the initial
purchasers.
Cracker Barrel has been advised that in connection with
establishing their initial hedges of the convertible note hedge and
warrant transactions, the hedge counterparties or their respective
affiliates expect to purchase shares of Cracker Barrel's common
stock and/or enter into various derivative transactions with
respect to Cracker Barrel's common stock concurrently with or
shortly after the pricing of the notes. This activity could
increase (or reduce the size of any decrease in) the market price
of Cracker Barrel's common stock or the notes at that time. The
hedge counterparties or their respective affiliates may modify
their hedge positions by entering into or unwinding various
derivatives with respect to Cracker Barrel's common stock and/or
purchasing or selling Cracker Barrel's common stock or other
securities of Cracker Barrel in secondary market transactions
following the pricing of the notes and prior to maturity of the
notes (and are likely to do so during any observation period
related to a conversion of the notes or following any purchase of
the notes by Cracker Barrel on any fundamental change repurchase
date, any redemption date, or any other date on which Cracker
Barrel retires the notes if it elects to terminate the relevant
portion of the convertible note hedge transactions).
The potential effect, if any, of these transactions and
activities on the market price of Cracker Barrel's common stock or
the notes will depend in part on market conditions and cannot be
ascertained at this time, but any of these activities could
adversely affect the value of Cracker Barrel's common stock, which
could affect the ability to convert the notes, the value of the
notes and the amount of cash, if any, and the number of and value
of the shares of Cracker Barrel's common stock, if any, holders
would receive upon conversion of the notes.
The offer and sale of the notes, the warrants and any shares of
Cracker Barrel's common stock issuable upon conversion of the notes
or exercise of the warrants have not been registered under the
Securities Act or any other applicable securities laws. As a
result, the notes, the warrants and the shares of Cracker Barrel's
common stock, if any, issuable upon conversion of the notes and/or
exercise of the warrants will be subject to restrictions on
transferability and resale and may not be offered, transferred or
sold except in compliance with the registration requirements of the
Securities Act or pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and any other applicable securities laws.
This press release does not and will not constitute an offer to
sell, or the solicitation of an offer to buy, the notes, any shares
of Cracker Barrel's common stock issuable upon conversion of the
notes, or any other securities, nor will there be any sale of the
notes or any such shares or other securities, in any state or other
jurisdiction in which such offer, sale or solicitation would be
unlawful. Any offer will be made only by means of a private
offering memorandum.
About Cracker Barrel Old Country Store®
Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL) provides a
caring and friendly home-away-from-home experience while offering
guests high-quality homestyle food to enjoy in-store or to-go and
unique shopping — all at a fair price. Established in 1969 in
Lebanon, Tenn., Cracker Barrel and
its affiliates operate more than 660 company-owned Cracker Barrel
Old Country Store® locations in 45 states and own the fast-casual
Maple Street Biscuit Company. For more information about the
Company, visit crackerbarrel.com.
CBRL-F
Forward-Looking Statements
This press release includes forward-looking statements
concerning Cracker Barrel's expectations, anticipations,
intentions, beliefs or strategies regarding the future, including
statements regarding the offering of the notes, the anticipated
terms of the notes being offered, the completion, timing and size
of the proposed offering, the intended use of the net proceeds and
the anticipated terms of, and the effects of entering into, the
convertible note hedge and warrant transactions. These, and similar
statements are forward-looking statements concerning matters that
involve risks, uncertainties and other factors which may cause the
actual performance of Cracker Barrel Old Country Store, Inc. and
its subsidiaries to differ materially from those expressed or
implied by this discussion. All forward-looking information is
provided pursuant to the safe harbor established under the Private
Securities Litigation reform Act of 1995 and should be evaluated in
the context of these factors. Forward-looking statements
generally can be identified by the use of forward-looking
terminology such as "trends," "assumptions," "target," "guidance,"
"outlook," "opportunity," "future," "plans," "goals," "objectives,"
"expectations," "near-term," "long-term," "projection," "may,"
"will," "would," "could," "expect," "intend," "estimate,"
"anticipate," "believe," "potential," "regular," "should,"
"projects," "forecasts," or "continue" (or the negative or other
derivatives of each of these terms) or similar terminology and
include the expected effects of COVID-19 on our business, financial
condition and results of operations and of operational improvement
initiatives, such as new menu items and retail offerings. Factors
which could materially affect actual results include, but are not
limited to: risks and uncertainties associated with the
COVID-19 pandemic, including the duration of the COVID-19 pandemic
and its ultimate impact on our business, levels of consumer
confidence in the safety of dine-in restaurants, restrictions
(including occupancy restrictions) imposed by governmental
authorities, the effectiveness of cost saving measures undertaken
throughout our operations, disruptions to our operations as a
result of the spread of COVID-19 in our workforce, and our
increased level of indebtedness, or constraints on our expenditures
or cash management, brought on by additional borrowing necessitated
by the COVID-19 pandemic; general or regional economic
weakness, business and societal conditions, and weather on sales
and customer travel; discretionary income or personal expenditure
activity of our customers; information technology-related
incidents, including data privacy and information security
breaches, whether as a result of infrastructure failures, employee
or vendor errors, or actions of third parties; our ability to
identify, acquire and sell successful new lines of retail
merchandise and new menu items at our restaurants; our ability to
sustain or the effects of plans intended to improve operational or
marketing execution and performance; uncertain performance of
acquired businesses, strategic investments and other initiatives
that we may pursue now or in the future; changes in or
implementation of additional governmental or regulatory rules,
regulations and interpretations affecting tax, wage and hour
matters, health and safety, pensions, insurance or other
undeterminable areas; the effects of plans intended to promote or
protect our brands and products; commodity price increases; the
ability of and cost to us to recruit, train, and retain qualified
hourly and management employees; the effects of increased
competition at our locations on sales and on labor recruiting,
cost, and retention; workers' compensation, group health and
utility price changes; consumer behavior based on negative
publicity or changes in consumer health or dietary trends or safety
aspects of our food or products or those of the restaurant industry
in general, including concerns about outbreaks of infectious
disease, as well as the possible effects of such events on the
price or availability of ingredients used in our restaurants; the
effects of our indebtedness and associated restrictions on our
financial and operating flexibility and ability to execute or
pursue our operating plans and objectives; changes in interest
rates, increases in borrowed capital or capital market conditions
affecting our financing costs and ability to refinance all or
portions of our indebtedness; the effects of business trends on the
outlook for individual restaurant locations and the effect on the
carrying value of those locations; our ability to retain key
personnel; the availability and cost of suitable sites for
restaurant development and our ability to identify those sites; our
ability to enter successfully into new geographic markets that may
be less familiar to us; changes in land, building materials and
construction costs; the actual results of pending, future or
threatened litigation or governmental investigations and the costs
and effects of negative publicity or our ability to manage the
impact of social media associated with these activities; economic
or psychological effects of natural disasters or unforeseen events
such as terrorist acts, social unrest or war and the military or
government responses to such events; disruptions to our restaurant
or retail supply chain, including as a result of COVID-19; changes
in foreign exchange rates affecting our future retail inventory
purchases; the impact of activist shareholders; our reliance on
limited distribution facilities and certain significant vendors;
implementation of new or changes in interpretation of existing
accounting principles generally accepted in the United States of America ("GAAP"); and
other factors described from time to time in our filings with the
Securities and Exchange Commission, press releases, and other
communications. Any forward-looking statement made by us herein, or
elsewhere, speaks only as of the date on which made. We expressly
disclaim any intent, obligation or undertaking to update or revise
any forward-looking statements made herein to reflect any change in
our expectations with regard thereto or any change in events,
conditions or circumstances on which any such statements are
based. Cracker Barrel may not consummate the proposed
offering described in this press release and, if the proposed
offering is consummated, cannot provide any assurances regarding
the final terms of the offer or the notes or its ability to
effectively apply the net proceeds as described above.
Investor Contact:
Jessica Hazel
(615) 235-4367
Media
Contact:
Heidi Pearce
(615) 235-4135
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SOURCE Cracker Barrel Old Country Store, Inc.