EZCorp’s $125 million seven-year convertibles talked at 1.875%-2.375%, up 20%-25%

By Stephanie N. Rotondo

Seattle, June 28 – EZCorp Inc.’s proposed $125 million offering of convertible senior notes due 2024 is talked at a yield of 1.875% to 2.375% and an initial conversion premium of 20% to 25%, a market source reported.

The deal, announced late Tuesday, is slated to price later Wednesday.

UBS Securities LLC and Jefferies LLC are the joint bookrunners on 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 notes are contingently convertible prior to Jan. 1, 2024. After that date, holders can convert the bonds at any time.

The company is non-callable for four years and can then be redeemed subject to a 130% stock price hurdle.

Proceeds will be used to repay borrowings under a senior secured credit facility and for general corporate purposes. The company may also use the funds to retire a portion of its outstanding 2.125% cash convertible senior notes due 2019 and 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.

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