Domino's Pizza to restructure debt via Dutch auction

ANN ARBOR, Mich. — In a move to restructure its debt, Domino's Pizza announced it is switching to asset-backed securities and conducting a modified Dutch auction to repurchase about one-quarter of its stock.

 

In a Dutch auction, a company proposes a price range for its stock and then allows shareholders to bid on that range. Based on those bids, the company then sets the final price. Domino's has proposed a range of $27.50 and $30.

 

According to a news release, Domino's plans to pay off a significant portion of its outstanding debt and enter into an asset-backed, lower-interest-rate securitized facility worth $1.85 billion. Doing so, the company said, will require a bridge loan for $1.35 billion.

 

"Based on the strong cash flow characteristics of our business, the appropriate corporate finance decision for our company is one that includes significant leverage," said David Brandon, chief executive and chairman of Domino's. "The most efficient and flexible debt we can negotiate is asset-backed securitization, which provides the lowest cost of financing available to us."

 

Once Domino's debt is repaid, it plans to pay a one-time cash dividend to shareholders.