Dave & Buster’s to offer $500 million in senior debt in private offering, stock soars 9%

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Dave & Buster’s Entertainment Inc. said Monday that it will offer $500 million in senior secured notes in a private offering that is exempt from registration requirements. The news sent stock soaring 9.3% in morning trading. The debt will be guaranteed by the same company subsidiaries that guarantee Dave & Buster’s term loan facility and revolving credit facility. Once the debt offering closes, Dave & Buster’s will have about $299.1 million in liquidity. The company will use the proceeds to pay the balance outstanding on both the term loan facility and revolving credit facility. In a business update issued last week, Dave & Buster’s said comp sales have steadily increased, but were still down 62% in September. In its most recent 10-Q filing the company reported $731.6 million in long-term debt. “[W]e believe said note offering would be a positive catalyst for the stock as it would provide over $200 million of incremental liquidity and remove the overhang of near-term concerns related to debt covenants and the potential for an additional equity raise,” wrote Raymond James analysts in a note. Raymond James rates Dave & Buster’s stock outperform. Dave & Buster’s stock has sunk 56% for the year to date while the S&P 500 index is up 7.8% for the year to date.
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