Darden begins tender offer for up to $600 million of four note series

By Susanna Moon

Chicago, June 30 – Darden Restaurants, Inc. said it began cash tender offers for up to $600 million principal amount of four series of notes, with a sub-cap of $300 million for the first two series of notes.

Pricing for the offers will be set at 2 p.m. ET on July 14 using a reference security and a fixed spread as follows, with the notes listed in order of priority acceptance level:

• $400 million 4.5% senior notes due 2021, with $300 million offer sub-cap, based on the 2.5% Treasury notes due May 15, 2024 plus 105 basis points;

• $450 million 3.35% senior notes due 2022, with $300 million offer sub-cap, based on the 2.5% Treasury notes due May 15, 2024 plus 80 bps;

• $150 million 6% senior notes due 2035 based on the 3.625% Treasury notes due Feb. 15, 2044 plus 180 bps; and

• $500 million 6.2% senior notes due 2017 based on the 0.625% Treasury notes due Sept. 30, 2017 plus 25 bps.

The hypothetical total purchase price per each $1,000 principal amount is $1,057.97 for the 4.5% notes due 2021, $1,001.40 for the 3.35% notes due 2022, $1,108.27 for the 6% notes due 2035 and $1,154.38 for the 6.2% notes due 2017.

The hypothetical pricing was set using the reference yield of the reference security as of 2 p.m. ET on June 27.

The total amount includes a $30.00 early tender payment per $1,000 of notes tendered by 2 p.m. ET on July 14, the early tender date.

Those who tender after the early tender deadline will receive the total amount less the early premium.

The company also will pay accrued interest up to but excluding the settlement date of July 29.

The offers will end at midnight ET on July 28.

Tendered notes may be withdrawn by the early tender deadline.

The tender offers are conditioned on the company’s planned sale of its Red Lobster business with enough proceeds to fund the offers.

Darden expects to use about $1 billion of the cash proceeds from the planned sale of its Red Lobster business to retire outstanding debt, according to a company press release.

In addition to the tender offers, Darden has agreed to repurchase $80 million and $210 million principal amount of its 3.79% senior notes due 2019 and its 4.52% senior notes due 2024, respectively. Darden’s agreement to repurchase the notes is conditioned upon the planned Red Lobster sale.

BofA Merrill Lynch (888 292-0070 or 980 387-3907 collect), US Bancorp (877 558-2607 or 612 336-7604 collect) and Wells Fargo Securities (866 309-6316 or 704 410-4760 collect) are the lead dealer managers, and Deutsche Bank Securities and Mizuho Securities are the co-dealer managers.

Requests may be directed to D.F. King & Co., Inc. (212 269-5550 for banks and brokers or 800 967-4617 for all others).

Darden is an Orlando, Fla.-based casual dining operator.

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