JWCA advises Bloomin’ Brands on a Convertible Exchange and Call Spread Unwind simultaneously with an Accelerated Share Repurchase

March 2024 | read press release

Transaction Background

In May 2022, JWCA advised Bloomin’ Brands (“BLMN”) on a convertible exchange of $125mm (~54%) of its 2025 convertible. Following the first refinancing transaction, BLMN’s stock price continued to rise, presenting another opportunity to retire a significant portion of the convertible ahead of maturity by delivering a mix of stock and cash. This enabled the liability management exercise to be done overnight with no market risk, while the simultaneous ASR mitigates dilution and locks in a discount to VWAP.

Bloomin’s objectives included:

  • Retire a significant portion of the remaining convertible outstanding 

  • Unwind the call spread hedge attached to the convertible

  • Offset immediate dilution from the convertible exchange

  • Minimize transaction and friction costs; execute as efficiently as possible

JWCA acted as Exchange Agent for the transaction and provided analysis and advice around:

  • Balancing exchange considerations to minimize repurchase price and friction costs

  • Investor outreach, negotiation, and execution

  • Accounting and tax analysis around the exchange of the existing convertible and ASR

  • Call spread unwind negotiation process

Results

The Company executed a successful liability management transaction for its 5.00% convertible notes due 2025:

  • No market risk for the Company on the exchange – the transaction was conducted confidentially and executed based on the closing stock price

  • Successfully unwound call spread and entered into $220mm ASR at meaningful discount