Casey's Locks in Financing

Chooses debt route in recapitalization plan, effort to thwart Couche-Tard

ANKENY, Iowa -- Two weeks after announcing it would seek to buy back 25% of its stock, Casey's General Stores Inc. yesterday announced that it has completed a private placement for $569 million of 5.22% senior unsecured notes due 2020.

The company intends to use the proceeds from this offering to finance its previously announced recapitalization plan that will be executed through a modified "Dutch auction" self tender offer for up to $500 million in value of shares of its common stock and to pay the fees and expenses in connection with the offer. Accessing the secured notes, [image-nocss] however, runs contrary to Casey's original plan to fund the buyback through "a combination of debt financing and available cash."

The reason for the change, sources told CSP Daily News, is to maintain the available cash on hand to drive Casey's growth initiatives.

In addition, the company will use approximately $59 million of the proceeds from the sale of the notes in connection with its prepayment of its senior notes with interest rates between 6.18% to 7.23% and its 7.38% senior notes, according to the company. Any proceeds from the offering not used for the foregoing will be used for general corporate purposes.

"We are excited that we are able to move forward with our highly accretive recapitalization plan, while maintaining a strong balance sheet and continuing to execute on our strategic initiatives," the company told employees, according to a report in The Globe and Mail.

Casey's launched the self tender on July 28 in response to Alimentation Couche-Tard's hostile bid to take over the company, offering first $36 per share and then an increased $36.75 per share. Couche-Tard's tender offer is scheduled to expire on Aug. 30.

Casey's shareholders have until midnight on Aug. 25 to tender their shares to the company's modified Dutch auction for between $38 and $40 per share.

Since announcing the Dutch auction, reports have shown that interest in Couche-Tard's tender offer has dropped from 19% of all of Casey's shares to about 12%.

An explanation of the terms and conditions of Casey's offer and specific instructions as to how to tender shares in the offer have been mailed to Casey's shareholders. MacKenzie Partners, New York, is serving as information agent for the tender offer.

Goldman, Sachs & Co. is acting as financial advisor to Casey's, and Cravath, Swaine & Moore LLP and Ahlers & Cooney, PC are providing legal advice.

Laval, Quebec-based Couche-Tard operates a network of 5,883 convenience stores located in 11 large geographic markets, including eight in the United States covering 43 states and the District of Columbia, and three in Canada covering all 10 provinces.

Casey's General Stores, based in Ankeny, Iowa, has 1,513 corporate stores in nine states.