Papa John’s Announces Repurchase and Conversion of All Convertible Preferred Stock Owned by Starboard Value LP - Seite 2

Jeff Smith added, “Two years ago, Starboard invested in Papa John’s and I joined the Board because of the tremendous potential of our pizza, our brand and our team members and franchisees. I could not be happier with the progress that the team has made thus far, and I am truly excited for the future. I look forward to continuing to work with this world-class team and fantastic board.”

As a result of the repurchase and conversion, the Company’s fully diluted common stock share count will increase by approximately 3.5 million shares and Starboard’s 3.6% preferential dividend on the Preferred Shares, which amounted to $9.0 million in fiscal 2020, will be eliminated. Elimination of Starboard’s Preferred Share dividend and the Preferred Share income allocation would have increased the Company’s earnings per diluted share by approximately $0.09 or 11%, on a pro forma basis, for the first fiscal quarter of 2021, assuming that the transaction had occurred at the end of 2020.¹ Also, in the second quarter of fiscal 2021, the Company will record a reduction to net income attributable to common shareholders of approximately $110 million as a one-time charge to equity. This charge reflects the excess of the one-time cash payment over the carrying value of the Preferred Shares. Assuming no further common shares are issued or repurchased, this would result in a reduction of approximately $3.00 per diluted share in the second fiscal quarter of 2021.

The transaction will be financed using cash on hand with the balance coming from the Company’s existing revolving credit facility. The repurchase of the Preferred Shares from Starboard is separate from and does not utilize any part of the Company’s existing $75 million share repurchase authorization for common stock.

The transaction was negotiated by an independent committee of the Papa John’s Board of Directors formed for the purpose of evaluating a possible transaction involving the Preferred Shares. Lazard acted as financial advisor and Hogan Lovells and Richards, Layton & Finger acted as legal advisors to the independent committee of the Board in connection with the transaction.

About Papa John’s

Papa John’s International, Inc. (NASDAQ: PZZA) opened its doors in 1984 with one goal in mind: BETTER INGREDIENTS. BETTER PIZZA. Papa John’s believes that using high quality ingredients leads to superior quality pizzas. Its original dough is made of only six ingredients and is fresh, never frozen. Papa John’s tops its pizzas with real cheese made from mozzarella, pizza sauce made with vine-ripened tomatoes that go from vine to can in the same day and meat free of fillers. It was the first national pizza delivery chain to announce the removal of artificial flavors and synthetic colors from its entire food menu. Papa John’s is headquartered in Louisville, Ky. and is the world’s third-largest pizza delivery company with more than 5,400 restaurants in 50 countries and territories. For more information about the Company or to order pizza online, visit www.PapaJohns.com or download the Papa John’s mobile app for iOS or Android.