JWCA advises Cracker Barrel on its $300 million convertible bond and call spread transaction

June 2021 | read press release

Transaction Background

Cracker Barrel successfully raised $300mm in the convertible market at attractive terms (0.625% coupon and 25.0% conversion premium)

Company objectives:

  • Take advantage of strong convertible market conditions

  • Diversify funding sources away from relying solely on its credit facility

  • Drive interest savings, EPS accretion, and jump-start capital return program

JWCA provided extensive analysis for Cracker Barrel on deal structuring and related items, such as:

  • Convertible and derivate overlay structuring

  • Share repurchase and dividend analysis

  • Accounting implications, including the impact of new accounting rules

  • Convertible and call spread documentation to ensure maximum value and future efficiency/flexibility for the Company

  • Syndicate structure and precedent data

  • Shareholder messaging

  • Advice on pricing on the day of execution

JWCA designed and ran a call spread auction process to achieve competitive terms

JWCA provided advice, support and analysis throughout the execution process

Results

Cracker Barrel’s convertible issuance was well-received by investors

  • Cracker Barrel’s stock price traded down only 1.9% on a day where casual dining peers traded down 1 – 2%. This compares to a typical stock price reaction of down 5 – 10%

  • 0.625% coupon priced at the middle of the marketed range

  • Company was able to repurchase $35 million of stock concurrently with the transaction at no premium to the closing stock price

Call spread documentation and auction process produced meaningful savings for Cracker Barrel, while maximizing flexibility for the Company