Darden lifts tender offer maximum amount, eliminates sub-caps

By Marisa Wong

Madison, Wis., July 15 – Darden Restaurants, Inc. said it has increased the maximum amount in its cash tender offers for four series of notes to $610 million and eliminated the tender caps that were in place for two of the series.

Originally, the company tendered 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 listed below.

As of 5 p.m. ET on July 14, the early tender date, holders had tendered the following:

• $272,541,000, or 68.14%, of the $400 million of outstanding 4.5% senior notes due 2021;

• $378,983,000, or 84.22%, of the $450 million of outstanding 3.35% senior notes due 2022;

• $115,327,000, or 76.88%, of the $150 million of outstanding 6% senior notes due 2035; and

• $218,311,000, or 43.66%, of the $500 million of outstanding 6.2% senior notes due 2017.

The notes are listed above in order of priority acceptance level. Since the combined amount of 4.5% and 3.35% notes tendered exceeds the maximum amount of the offers, the company does not expect to accept any of the 6% or 6.2% notes.

Tendered notes accepted for purchase will be purchased on a prorated basis immediately following the expiration date. As reported, the offers will end at midnight ET on July 28, and the settlement date is slated for July 29.

As announced, for each $1,000 principal amount, pricing was set at 2 p.m. ET on July 14 using a reference security and a fixed spread as follows:

• $1,056.73 for the 4.5% notes, calculated using the 2.5% Treasury notes due May 15, 2024 plus 105 basis points;

• $1,000.04 for the 3.35% notes, determined using the 2.5% Treasury notes due May 15, 2024 plus 80 bps;

• $1,107.18 for the 6% notes, calculated using the 3.625% Treasury notes due Feb. 15, 2044 plus 180 bps; and

• $1,152.84 for the 6.2% notes, calculated using the 0.625% Treasury notes due Sept. 30, 2017 plus 25 bps.

The total amounts include a $30.00 early tender payment per $1,000 of notes tendered by 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.

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 prior 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. It launched the offers on June 30.

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