Monro Announces Agreement to Eliminate Class C Preferred Stock

Monro, Inc. (Nasdaq: MNRO) (“Monro” or the “Company”), a leading provider of automotive undercar repair and tire services, today announced it has entered into an agreement with the holders (the “Class C Holders”) of its Class C Convertible Preferred Stock (the “Class C Preferred Stock”) under which the Class C Preferred Stock will be eliminated (the “agreement”), subject to receipt of shareholder approval. The agreement has been approved by Monro’s Board of Directors, which will recommend that shareholders approve certain amendments to the Company’s Certificate of Incorporation to effectuate the agreement at Monro’s 2023 Annual Meeting of Shareholders (the “Annual Meeting”), expected to be held on August 15, 2023.

Under the terms of the agreement, in exchange for agreeing that there will be an automatic conversion of any outstanding shares of Class C Preferred Stock that remain outstanding by no later than the third anniversary of the Annual Meeting, the conversion rate of the Class C Preferred Stock to Monro common stock will be adjusted so that each share of Class C Preferred Stock will convert into 61.275 shares of common stock, an increase from the current conversion rate of 23.389 shares of common stock for each share of Class C Preferred Stock under the Company’s Certificate of Incorporation. The adjusted conversion rate represents a premium of approximately $36.6 million, based on Monro’s closing stock price on May 12, 2023, the date of the agreement. Assuming all Class C Preferred Stock were converted on the date of the agreement at the adjusted conversion rate, the value of the additional number of shares of common stock that the Class C Holders would receive represents approximately 2.3% of the Company’s total equity value.

Monro’s Board of Directors appointed a Special Committee to evaluate and negotiate a recapitalization of the Class C Preferred Stock, composed of five independent and disinterested directors. Following careful deliberation and negotiations with the Class C Holders, the Special Committee, with the support of independent financial and legal advisors, unanimously recommended that the Board approve the agreement. The Duff & Phelps Opinions Practice of Kroll, LLC provided a fairness opinion to the Special Committee in connection with the execution of the agreement.