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CKE Restaurants, Inc. Announces Tender Offer for Outstanding Debt and Related Consent Solicitation

Category:

Friday, March 1, 2013 8:01 pm EST

Dateline:

CARPINTERIA, Calif.

CARPINTERIA, Calif.--(BUSINESS WIRE)--CKE Restaurants, Inc. (“CKE Restaurants” or the “Company”) announced today that it has launched a cash tender offer for up to $412,122,000 aggregate principal amount (the “Tender Cap”) of its outstanding 11.375% Senior Secured Second Lien Notes due 2018 (the “Notes”).

Simultaneously, CKE Restaurants has commenced a solicitation of consents from the holders of the Notes which provide for waivers of, and proposed amendments to, certain covenants in the indenture (the “Indenture”) pursuant to which the Notes were issued (the “Proposed Amendments”), and, separately, to authorize release of all of the collateral subject to the liens securing the Notes (the “Collateral Release”). Holders who tender their Notes into the cash tender offer will be deemed to have given their consents to both the Proposed Amendments and the Collateral Release with respect to those tendered Notes. Holders of the Notes may not deliver a consent with respect to only the Proposed Amendments or only the Collateral Release. Consents from at least a majority of the holders of Notes are required in order to approve the Proposed Amendments. Consents from at least two-thirds in aggregate principal amount of outstanding Notes are required in order to approve the Collateral Release. The consummation of the tender offer and consent solicitation is conditioned upon, among other things, the consummation of CKE Restaurants’ company-wide refinancing transactions (the “Financing Condition”), which, as currently contemplated, includes the refinancing of substantially all existing indebtedness of CKE Restaurants and its parent, CKE Inc. (“Parent”), including the Notes and Parent’s 10.50%/11.25% Senior Unsecured PIK Toggle Notes due 2016, and the termination of the Company’s current senior secured revolving credit facility. The completion of the refinancing transactions is not conditioned on the completion of the tender offer and consent solicitation.

The tender offer and consent solicitation are being conducted pursuant to an Offer to Purchase and Consent Solicitation Statement, dated as of the date hereof (the “Statement”).

The Notes and other information relating to the tender offer and consent solicitation are set forth in the table below.

Title of Security

   

CUSIP and ISIN

Numbers

   

Aggregate
Principal Amount

Outstanding (1)

   

Tender Cap

   

Tender Offer
Consideration (2)

   

Early Consent

Payment(3)

   

Total

Consideration
(2,3,4)

 

11.375% Senior Secured
Second Lien Notes due 2018

12561EAK1;
US12561EAK10

$472,122,000 $412,122,000 $1,147.50 $30.00 $1,177.50
 
1     As of the date hereof.
2 For each $1,000 principal amount of Notes, excluding accrued but unpaid interest thereon, which will be paid in addition to the Tender Offer Consideration or the Total Consideration, as applicable.
3 For each $1,000 principal amount of Notes tendered prior to the Early Consent Date.
4 Includes the Tender Offer Consideration and the Early Consent Payment.
 

Each holder who validly tenders its Notes prior to 11:59 p.m., New York City time, on March 14, 2013 (as may be extended, the “Early Consent Date”) will receive, if such Notes are accepted for purchase pursuant to the tender offer, the total consideration of $1,177.50 per $1,000 principal amount of Notes tendered, which includes the tender offer consideration of $1,147.50 and an early consent payment of $30.00. In addition, accrued interest up to, but not including, the payment date of the Notes will be paid in cash on all validly tendered and accepted Notes.

The tender offer and consent solicitation will expire at 11:59 p.m., New York City time, on March 28, 2013, unless extended or earlier terminated (the “Expiration Date”). Tendered Notes may be withdrawn at any time prior to the earlier of (x) the date the Company receives the requisite consents and executes a supplemental indenture with respect to the Proposed Amendments and/or Collateral Release, and (y) March 14, 2013 (such time and date as described in (x) or (y), as the same may be extended, the “Withdrawal Deadline”), but not thereafter. Prior to the Withdrawal Deadline, if a holder withdraws its tendered Notes, such holder will be deemed to have revoked its consents to both the Proposed Amendments and the Collateral Release and may not deliver consents without re-tendering its Notes.

CKE Restaurants expects that the supplemental indenture to effectuate the Proposed Amendments will be executed promptly after receipt of the requisite consents for the Proposed Amendments. To the extent that the requisite consents for the Collateral Release have been obtained at the time such supplemental indenture is executed, such supplemental indenture will also include provisions effecting the Collateral Release.

After the Withdrawal Deadline, consents to the Proposed Amendments may not be validly revoked after the execution of the supplemental indenture, and if the supplemental indenture gives effect to the Collateral Release, as provided above, consents to the Collateral Release may not be revoked after the supplemental indenture is executed. Nonetheless, if the supplemental indenture that was executed does not give effect to the Collateral Release, consents to the Collateral Release may be validly revoked (but neither the relevant Notes may be withdrawn nor the consents to the Proposed Amendments may be revoked) until the execution of the supplemental indenture effecting the Collateral Release.

Holders who validly tender their Notes after the Early Consent Date will receive only the tender offer consideration of $1,147.50 per $1,000 principal amount of Notes tendered and will not be entitled to receive an early consent payment if such Notes are accepted for purchase pursuant to the tender offer. Subject to the terms and conditions of the tender offer and consent solicitation, payment of the tender offer consideration or total consideration, as applicable, will occur promptly after the Expiration Date (such payment is currently expected to occur on or about April 1, 2013, unless the Expiration Date is extended or the tender offer is earlier terminated).

In addition to the Financing Condition, the tender offer and consent solicitation are subject to other customary conditions precedent, as described more fully in the Statement. If any of the conditions is not satisfied, CKE Restaurants may terminate the tender offer and consent solicitation and return tendered Notes. CKE Restaurants has the right to waive any of the foregoing conditions with respect to the Notes. In addition, CKE Restaurants has the right, in its sole discretion, to terminate the tender offer and consent solicitation at any time, subject to applicable law.

CKE Restaurants expects that, following settlement of the tender offer and consent solicitation, it will instruct the trustee to issue an irrevocable notice, in accordance with the Indenture, to optionally redeem $60.0 million aggregate principal amount of the remaining Notes on July 15, 2013 pursuant to Clause (2) of Section 5 of the Notes, at a price equal to 103% of their principal amount thereof plus accrued and unpaid interest thereon to the applicable redemption date (subject to the right of the holders of record on the relevant record date to receive interest due on the relevant interest payment date). The Company expects to discharge the indenture in connection with the refinancing transactions.

This announcement shall not constitute an offer to purchase or a solicitation of an offer to sell any securities. The complete terms and conditions of the tender offer are set forth in the Statement and the related Letter of Transmittal (the “Tender Offer Documents”) that are being sent to holders of the Notes. The tender offer and consent solicitation is being made only through, and subject to the terms and conditions set forth in, the Tender Offer Documents and related materials.

Barclays Capital Inc. is acting as Dealer Manager for the tender offer and Solicitation Agent for the consent solicitation. Questions regarding the tender offer and consent solicitation may be directed to Barclays Capital Inc., Attn: Liability Management Group at (800) 438-3242 (toll-free) or at (212) 528-7581 (collect).

D.F. King & Co., Inc. is acting as the Information Agent and Tender Agent for the tender offer. Requests for the Tender Offer Documents may be directed to D.F. King & Co., Inc. at (212) 269-5550 (for brokers and banks) or (800) 290-6426 (for all others).

Neither CKE Restaurants’ board of directors nor any other person makes any recommendation as to whether holders of Notes should tender their Notes or deliver consents, and no one has been authorized to make such a recommendation. Holders of Notes must make their own decisions as to whether to tender their Notes and deliver their consents, and if they decide to do so, the principal amount of the Notes to tender. Holders of Notes should read carefully the Tender Offer Documents and related materials before any decision is made with respect to the tender offer.

About CKE Restaurants

CKE Restaurants, Inc. is a privately held company headquartered in Carpinteria, Calif. As of January 28, 2013, the Company, through its subsidiaries, had a total of 3,318 franchised or company-operated restaurants in 42 states and 28 foreign countries. For more information about CKE Restaurants, please visit www.ckr.com.

Forward-Looking Statements

Matters discussed in this press release contain forward-looking statements, which are based on management’s current beliefs and assumptions. Although the Company does not make forward-looking statements unless it has a reasonable basis for doing so, the Company cannot guarantee their accuracy. Such statements are subject to risks and uncertainties that are often difficult to predict, are beyond the Company’s control, and which may cause results to differ materially from expectations. Factors that could cause the Company’s results to differ materially from those described include, but are not limited to: the Company’s ability to compete with other restaurants, supermarkets and convenience stores for customers, employees, restaurant locations and franchisees; changes in consumer preferences, perceptions and spending patterns; changes in food, packaging and supply costs; changes in interest rates, commodity prices, labor costs, energy costs and other expenses; the ability of the Company’s key suppliers to continue to deliver premium-quality products to the Company at moderate prices; the Company’s ability to successfully enter new markets, complete construction of new restaurants and complete remodels of existing restaurants; changes in general economic conditions and the geographic concentration of the Company’s restaurants, which may affect the Company’s business; the Company’s ability to attract and retain key personnel; the Company’s franchisees’ willingness to participate in the Company’s strategy; risks associated with implementing the Company’s growth strategy, including opening new domestic and international restaurants; the operational and financial success of the Company’s franchisees; the willingness of the Company’s vendors and service providers to supply the Company with goods and services pursuant to customary credit arrangements; risks associated with operating in international locations; the effect of the media’s reports regarding food-borne illnesses, food tampering and other health related issues on the Company’s reputation and its ability to procure or sell food products; the effectiveness of the Company’s marketing and advertising programs; the seasonality of the Company’s operations; the effect of increasing labor costs including healthcare related costs; increased insurance and/or self-insurance costs; the Company’s ability to comply with existing and future health, employment, environmental and other government regulations; the Company’s ability to adequately protect its intellectual property; the adverse effect of litigation in the ordinary course of business; a significant failure, interruption or security breach of the Company’s computer systems or information technology; catastrophic events, including war, terrorism and other international conflicts, public health issues or natural causes; the potentially conflicting interests of the Company’s controlling stockholder and its creditors; the Company’s substantial leverage, which could limit its ability to raise capital, react to economic changes or meet obligations under its indebtedness; the effect of restrictive covenants in the indentures governing the Notes and the Credit Facility on the Company’s business; and other factors as discussed in the Company’s filings with the SEC.

As a result of these risks and uncertainties, or as a result of other risks and uncertainties of which the Company’s management is currently unaware or that the Company’s management does not presently believe to be material, the Company cannot assure readers that the forward-looking statements in this press release will prove to be accurate. Furthermore, if the Company’s forward-looking statements prove to be inaccurate, the impact may be material. In light of the significant uncertainties in these forward-looking statements, readers should not regard these statements as a representation or warranty by the Company or any other person that the Company will achieve its objectives and plans in any specified time frame, or at all. The forward-looking statements in this press release speak only as of the date of this press release.

The Company expressly disclaims any obligation to publicly update or revise any forward-looking statement, whether to conform such statement to actual results or as a result of changes in the opinions or expectations of the Company’s management, new information, future events or otherwise, in each case except as required by law.

Contact:

CKE Restaurants, Inc.
Beth Mansfield
Public Relations
805-745-7741
bmansfield@ckr.com