Dave & Buster's Stock Up After Plan to Offer $500M of Notes

Dave & Buster's shares rose after the entertainment/dining chain proposed a $500 million private offering of notes.
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Dave & Buster's  (PLAY) - Get Report shares rose after the entertainment/dining chain proposed a private offering of $500 million of notes.

The shares recently traded at $17.45, up nearly 8%. They have dropped 60% this year. 

The Dallas company, like the entire restaurant industry, has been hammered by the coronavirus pandemic, which for months shut its facilities and kept customers at home.

The notes are senior secured, due in 2025. The company expects to use the proceeds from the offering to repay all amounts outstanding under its term-loan facility and to repay drawings under its revolving-credit facility.

After those repayments, Dave & Buster’s estimates its available liquidity will total about $299.1 million. That's double the $150 million minimum liquidity covenant under the company’s revolving-credit facility.

Last week, Dave & Buster’s reported an improving trend in comparable sales for September and August, but overall sales remain lower as the company looks to rebound from the pandemic.

Comparable-store sales declined 75% in August and 62% in September, compared with a drop of 87% during the second quarter, Dave & Buster's said in a statement.

The company said it had opened one new store and reopened 98 of its 136 stores as of Oct. 4.

In August, 84 stores were open at the end of the month, of which 68 were comparable stores.

The 68 comparable stores performed at an index of 46% compared with their 2019 levels.

In September, 99 stores were open at the end of the month, of which 81 stores were comparable stores.

The 81 comparable stores performed at an index of 65% compared with their 2019 levels, excluding five open stores where governments have not permitted arcades to open.