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Jersey Mike's Subs Sells Unique $760 Million Bonds with IPO Repayment Option

Sandwich chain Jersey Mike's Subs raises $760 million in bonds. Company planning to use IPO proceeds to repay a portion of the debt. Company has seen significant growth over the past few years.

By Emergent AI Desk

· 2 min read · 1 source

Sandwich chain Jersey Mike's Subs raises $760 million in bonds, planning to use IPO proceeds to repay a portion of the debt.

CONTENT:

Jersey Mike's Subs, a popular sandwich chain based in the United States, recently announced the sale of approximately $760 million in bonds. An unusual provision in the bond agreement allows the company to repay about half of the principal early with funds from a future initial public offering (IPO), according to a report by The Wall Street Journal.

The bond sale comes as Jersey Mike's Subs prepares for a potential IPO, which could value the company at around $1.5 billion, based on the pricing of similar deals. The company has yet to determine the timeline for the IPO.

The inclusion of an early repayment option in the bond agreement is not common in the industry. According to The Journal, the feature reduces the risk for bondholders because the company will have an additional incentive to generate strong earnings and pay down debt quickly.

The proceeds from the IPO would provide Jersey Mike's Subs with the necessary funds to repay a substantial portion of the debt, making it an attractive proposition for investors. The company's strong financial performance and growth potential have contributed to its decision to consider an IPO.

Jersey Mike's Subs has seen significant growth over the past few years, with its system-wide sales increasing by 6.3% in 2019. The company currently operates more than 1,600 locations in the United States and internationally.

The bond sale was led by J.P. Morgan Chase & Co., Bank of America Corp., and Goldman Sachs Group Inc. The bonds were issued in two tranches: $550 million in 3.50% senior notes due in 2029 and $210 million in 4.25% senior notes due in 2039.

The sandwich chain's move to sell bonds with an IPO repayment option highlights the company's confidence in its future financial success and its ability to generate strong earnings. The bond sale is expected to provide Jersey Mike's Subs with the capital it needs to fuel its expansion plans and continue its growth trajectory.

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  1. Jersey Mike’s Is Selling Debt It Can Pay Down With IPO Proceeds

    bloomberg.com · bloomberg.com ·

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