EZCORP, Inc. (NASDAQ: EZPW) (the “Company”), a leading provider
of pawn transactions in the United States and Latin America,
announced today the pricing of its private offering of $200,000,000
aggregate principal amount of its convertible senior notes due 2029
(the “Convertible Notes”). The offering was upsized from the
previously announced offering size of $175,000,000 aggregate
principal amount of Convertible Notes. The Convertible Notes were
offered in a private offering to persons reasonably believed to be
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933 (the “Securities Act”). The Company granted
an option to the initial purchasers to purchase, for settlement
within a 13-day period from, and including, the date on which the
Convertible Notes are first issued, up to an additional $30,000,000
aggregate principal amount of Convertible Notes. The sale of the
Convertible Notes is expected to close on December 12, 2022,
subject to customary closing conditions.
The Convertible Notes will bear interest at a rate of 3.75% per
annum, payable semiannually in arrears on June 15 and December 15
of each year, beginning on June 15, 2023, and will be convertible
into cash, shares of the Company’s Class A common stock or a
combination thereof, at the Company’s election. The Convertible
Notes have an initial conversion rate of 89.0313 shares of the
Class A common stock per $1,000 principal amount of the Convertible
Notes (which is equal to an initial conversion price of
approximately $11.23 per share of the Company’s Class A common
stock), representing an initial conversion premium of approximately
30% above the closing price of $8.64 per share of the Company’s
Class A common stock on December 7, 2022. The conversion rate is
subject to adjustment in certain circumstances.
The Convertible Notes will mature on December 15, 2029, unless
earlier converted, redeemed or repurchased in accordance with their
terms prior to such date. Prior to June 15, 2029, the Convertible
Notes will be convertible at the option of the holder only upon the
occurrence of certain events and during certain periods, and
thereafter, will be convertible at the option of the holder at any
time prior to the close of business on the business day immediately
preceding the maturity date.
The Company, at its option, may redeem for cash all or any
portion (subject to certain limitations) of the Convertible Notes
on or after December 21, 2026, if the last reported sale price of
the Company’s Class A common stock has been at least 130% of the
conversion price then in effect for at least 20 trading days
(whether or not consecutive), including the trading day immediately
preceding the date on which the Company provides the applicable
redemption notice, during any 30 consecutive trading day period
ending on, and including, the trading day immediately preceding the
date on which the Company provides the applicable redemption
notice. The redemption price will be equal to 100% of the principal
amount of the Convertible Notes to be redeemed, plus accrued and
unpaid interest to, but excluding, the redemption date.
The Company estimates that the net proceeds from the offering
will be approximately $193.7 million (or approximately $222.8
million if the initial purchasers exercise their option to purchase
additional notes in full), after deducting fees and estimated
offering expenses payable by the Company. The Company expects to
use approximately $182.0 million of the net proceeds from the
offering of the Convertible Notes to repurchase approximately
$109.4 million in aggregate principal amount of its 2.875%
Convertible Senior Notes Due 2024 (the “2024 Convertible Notes”)
and approximately $69.1 million in aggregate principal amount of
its 2.375% Convertible Senior Notes Due 2025 (the “2025 Convertible
Notes” and, together with the 2024 Convertible Notes, the “Existing
Convertible Notes”) as described below. The Company also intends to
use approximately $5.0 million of the net proceeds from the
offering of the Convertible Notes to repurchase for cash shares of
its Class A common stock concurrently with the offering of
Convertible Notes as described below. The Company intends to use
any excess proceeds for general corporate purposes, and may also
use all or a portion of the remaining net proceeds from the
offering to repurchase other shares of its Class A common stock
from time to time, and/or to repurchase, redeem or otherwise retire
its indebtedness (including, without limitation, its Existing
Convertible Notes) from time to time.
Contemporaneously with the pricing of the Convertible Notes in
the offering, the Company entered into separate, privately
negotiated transactions (the “concurrent note repurchases”) with
one or more holders of the Existing Convertible Notes to repurchase
a portion of the 2024 Convertible Notes and the 2025 Convertible
Notes. In addition, the Company may, from time to time, repurchase,
redeem or otherwise retire additional Existing Convertible Notes.
The terms of the concurrent note repurchases were individually
negotiated with one or more holders of the Existing Convertible
Notes depending on several factors, including the market price of
the Company’s Class A common stock and the trading price of the
Existing Convertible Notes at the time of each such concurrent note
repurchase. The concurrent note repurchases are not conditioned
upon the completion of the offering, nor is the completion of the
offering conditioned upon the concurrent note repurchases.
The Company expects that certain holders of the Existing
Convertible Notes that the Company has agreed to repurchase that
have hedged their equity price risk with respect to such Existing
Convertible Notes will, concurrently with or shortly after the
pricing of the Convertible Notes, unwind all or part of their hedge
positions in respect of their Existing Convertible Notes subject to
such repurchase by buying the Company’s Class A common stock and/or
entering into or unwinding various derivative transactions with
respect to the Company’s Class A common stock. The repurchase of
the Existing Convertible Notes and the potential related market
activities by holders of the Existing Convertible Notes
participating in the concurrent note repurchases could increase (or
reduce the size of any decrease in) the market price of the
Company’s Class A common stock, which may affect the trading price
of the Convertible Notes at that time and may have increased the
conversion price of the Convertible Notes. The Company cannot
predict the magnitude of such market activity or the overall effect
it will have on the price of the Convertible Notes or the Company’s
Class A common stock.
In addition, concurrently with the offering of the Convertible
Notes, the Company entered into privately negotiated transactions
effected with or through one of the initial purchasers or its
affiliate to repurchase for cash shares of the Company’s Class A
common stock from purchasers of Convertible Notes in the offering
(the “concurrent share repurchases”). The purchase price per share
of the Company’s Class A common stock repurchased in such
concurrent share repurchases will equal the closing sale price per
share of the Company’s Class A common stock on the Nasdaq Global
Select Market on December 7, 2022. These concurrent share
repurchases could increase, or prevent a decrease in, the market
price of the Company’s Class A common stock. In the case of the
share repurchases effected concurrently with this offering, this
activity could increase, or prevent a decrease in, the market price
of the Company’s Class A common stock or the Convertible Notes
concurrently with, or shortly after, the pricing of the Convertible
Notes, and may have increased the conversion price for the
Convertible Notes.
This press release is neither an offer to sell nor a
solicitation of an offer to buy any securities, nor will there be
any sale of these securities in any state or jurisdiction in which
such an offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
state or jurisdiction.
The Convertible Notes and any shares of the Company’s Class A
common stock issuable upon conversion of the Convertible Notes have
not been registered under the Securities Act, or the securities
laws of any other jurisdiction, and may not be offered or sold in
the United States absent registration or an applicable exemption
from registration requirements. The offering is being made to
persons reasonably believed to be qualified institutional buyers
pursuant to Rule 144A under the Securities Act.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This announcement contains certain forward-looking statements
regarding the Company’s strategy, initiatives and expected
performance. These statements are based on the Company’s current
expectations as to the outcome and timing of future events. All
statements, other than statements of historical facts, including
all statements regarding the offering of the Convertible Notes and
any concurrent note repurchases or concurrent share repurchases,
that address activities or results that the Company plans, expects,
believes, projects, estimates or anticipates will, should or may
occur in the future, including future capital expenditures and
future financial or operating results, are forward-looking
statements. Actual results for future periods may differ materially
from those expressed or implied by these forward-looking statements
due to a number of uncertainties and other factors, including
operating risks, liquidity risks, legislative or regulatory
developments, market factors, current or future litigation and
risks associated with the COVID-19 pandemic. For a discussion of
these and other factors affecting the Company’s business and
prospects, see the Company’s annual, quarterly and other reports
filed with the Securities and Exchange Commission. The Company
undertakes no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results over
time.
ABOUT EZCORP
Formed in 1989, EZCORP has grown into a leading provider of pawn
transactions in the United States and Latin America. It also sells
merchandise, primarily collateral forfeited from pawn operations
and pre-owned merchandise purchased from customers. We are
dedicated to satisfying the short-term cash needs of consumers who
are both cash and credit constrained, focusing on an
industry-leading customer experience. EZCORP is traded on the
NASDAQ stock market under the symbol EZPW and is a member of the
S&P 1000 Index and NASDAQ Composite Index.
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version on businesswire.com: https://www.businesswire.com/news/home/20221208005517/en/
Email: Investor_Relations@ezcorp.com Phone: (512) 314-2220 Jean
Marie Young Managing Director, Three Part Advisors Three Part
Advisors Email: jyoung@threepa.com Phone: (631) 418-4339
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