OSI Restaurant Partners begins Dutch auction tender offer for portion of 10% notes

By Angela McDaniels

Tacoma, Wash., Feb. 18 - OSI Restaurant Partners, LLC has begun a tender offer for the 10% senior notes due June 15, 2015 issued by the company and OSI Co-Issuer, Inc., according to a company news release.

The company said it will spend up to $73 million on the offer, excluding accrued interest. This cap is based on the maximum amount of company funds OSI Restaurant is allowed to use under its senior secured credit facility for the purchase of outstanding notes.

Of the $500 million notes issued, $488.2 million principal amount remains outstanding.

The offer is being conducted as a modified Dutch auction with a bid price range of $225 to $275 per $1,000 principal amount of notes.

The total payment for each note will equal a base price of $225 - which includes an early tender payment of $25 for notes tendered by the early tender time - plus a clearing premium of no more than $50.

The company will also pay accrued interest up to but excluding the payment date.

The clearing premium will be the lowest single bid premium that will allow the company to pay an amount equal to the tender cap. If the purchase of all notes tendered would result in the company paying less than the tender cap, the clearing premium will be the highest bid premium.

The early tender time is 5 p.m. ET on March 3, and the tender offer will expire at midnight ET on March 18.

OSI Restaurant said the purpose of the offer is to reduce the debt and improve the company's financial covenant position under its senior credit facilities.

The offer is being funded with cash on hand and the proceeds of a planned contribution of at least $47 million from the company's parent, OSI HoldCo, Inc. This contribution is expected to be funded through distributions to OSI HoldCo by one of its subsidiaries that owns about 360 restaurant properties that are sub-leased to OSI Restaurant.

The offer is conditioned on receipt of the contribution, and OSI Restaurant said there can be no assurance that the contribution will occur.

The dealer manager is Miller Buckfire & Co., LLC (call Adam Fitzner at 212 895-1865 or Ofir Nitzan at 212 895-1871). The depositary and information agent is D.F. King & Co., Inc. (800 431-9643 or 212 269-5550).

OSI Restaurant is a Tampa, Fla., casual dining restaurant company.

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