MARYVILLE Tenn. Ruby Tuesday Inc. said Monday it plans to offer 10 million shares of its common stock, with proceeds earmarked to pay down corporate debt.
The operator of franchisor to 901 namesake casual-dining restaurants noted that an additional 1.5 million shares are available for purchase by the underwriters to cover any overallotments. Wells Fargo Securities and Bank of America-Merrill Lynch are joint book-running managers, and SunTrust Robinson Humphrey and Morgan Keegan & Co. are co-managers of the offering.
In the company’s offering prospectus filed with securities regulators on Monday, the company estimated net proceeds of $73.3 million, using Ruby Tuesday’s July 16 stock price of $7.77 per share. If underwriters exercise their overallotment option, the company would raise about $84.4 million, the filing said.
All funds are earmarked to repay debt. Ruby Tuesday reported long-term debt, including capital leases, of $476.6 million at the end of its fiscal 2009, which ended June 2. The company renegotiated its credit facilities in April 2008 as sales and earnings were slipping and the company was close to breaching debt covenants. It now has to work to repay debt and hit certain leverage ratios before resuming any shareholder dividends.
For the full fiscal year, Ruby Tuesday reported a loss of $17.9 million, or 35 cents per share, compared with a profit of $26.4 million, or 51 cents per share, a year earlier. The latest-year results included more than $73 million in impairment charges for restaurant closures and goodwill. Fiscal 2009 revenue fell 8.2 percent to $1.25 billion.
Contact Sarah E. Lockyer at [email protected].