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Domino's commences recapitalization program

ANN ARBOR Mich. Domino's Pizza Inc. announced Wednesday a recapitalization plan that calls for up to $415.5 million in stock repurchases under a modified Dutch tender auction, a tender offer for all its senior subordinated notes and the eventual closing of an asset-backed securitized facility worth $1.85 billion.

The company, which operates or franchises a system of 8,238 namesake pizza delivery units, said an asset-backed securitized facility is "an attractive source of financing" that will provide "significant" leverage to complement the company's strong cash-flow. The asset-based securitized facility also boasts a lower interest rate and fewer restrictive covenants versus the company's current bank and bond debt structure, Domino's said.

The recapitalization plan includes a modified Dutch tender auction to repurchase up to 13.85 million shares, or 22 percent of total shares outstanding, for a per-share price between $27.50 and $30. The company commenced the offer Wednesday and said it will expire March 9. Domino's directors, executive officers and 27-percent stakeholder Bain Capital LLC will not take part in the tender offer, the company said. After the offer has concluded, however, Domino's can buy back shares from Bain under certain conditions so that Bain's total ownership does not exceed one-third of the company's total shares outstanding.

Domino's also plans to tender all remaining notes, and will set the price on Feb. 23. The aggregate outstanding principal amount of the notes is approximately $274 million.

The company has negotiated a $1.35 billion bridge loan to fund the tender offers and to repay all existing bank debt. In addition, the company plans to use remaining funds to pay a "significant special cash dividend" to shareholders. If the planned asset-backed securitized facility is not completed, the bridge loan will convert to a five-year term loan, Domino's said.

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