Portillo’s Inc. Announces Offering of Class A Common Stock in “Synthetic Secondary” Transaction
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Insights
The announcement by Portillo's Inc. of an underwritten public offering of 8,000,000 shares of Class A common stock, with a 30-day option for the underwriter to purchase an additional 1,200,000 shares, is a strategic financial move with implications for the company's equity structure and investor relations. The transaction, being non-dilutive, indicates that the company is not increasing its total share count but rather is restructuring the ownership of existing shares. The synthetic secondary transaction will result in the conversion of certain Class B shares into Class A shares, thus maintaining the same total common stock share count. This maneuver can potentially enhance liquidity for Class A shares and could be seen as an attempt to consolidate voting power or simplify the company's capital structure.
For investors, this offering provides an opportunity to evaluate the company's strategic priorities, as the proceeds are intended for internal restructuring rather than external growth or operational funding. It is also noteworthy that BofA Securities is the sole underwriter, which may suggest confidence in the offering's success. However, investors should be aware of market conditions that could affect the sale price of these shares and the overall valuation of the company. The pricing of the shares relative to market value will be an important factor to monitor, as it can influence investor sentiment and stock performance in the short term.
From a market perspective, Portillo's Inc.'s decision to engage in a public offering and the subsequent rebalancing of its Class A and Class B shares could signal to the market the company's intent to streamline its equity structure and possibly improve corporate governance. The fact that Portillo's will not receive any proceeds from the offering suggests that this move is more about shareholder alignment than raising capital for immediate operational needs. The impact of this offering on the stock's liquidity and market perception is contingent on the execution of the sale and the market's response to the increase in available Class A shares.
Investors and potential shareholders may interpret this restructuring as a positive sign of the company's maturity and a commitment to a more standardized equity framework, which could influence the stock's attractiveness. Additionally, the involvement of a prominent underwriter like BofA Securities could lend credibility to the offering and potentially attract institutional investors. The market's reaction to this offering will be telling, especially in terms of the stock's trading volume and price stability in the days following the transaction.
In terms of legal and regulatory considerations, Portillo's Inc.'s public offering is being conducted under an effective shelf registration statement, which allows the company to sell securities to the public without the need for a separate registration for each offering. This approach provides Portillo's with the flexibility to act quickly in response to market conditions and investor interest. The role of the SEC in this process is to ensure that all necessary disclosures and legal requirements are met, providing protection for investors.
It is crucial for investors to review the prospectus and other SEC filings to fully understand the terms of the offering and the rights associated with Class A versus Class B common stock. The distinction between the two classes typically lies in voting rights and dividend entitlements, which can affect shareholder influence and investment returns. Investors should also be aware of the underwriter's over-allotment option, as its exercise could lead to additional changes in the share distribution and potentially impact the stock's market performance.
CHICAGO, Feb. 28, 2024 (GLOBE NEWSWIRE) -- Portillo’s Inc. (“Portillo’s” or the “Company”) (Nasdaq: PTLO), the fast-casual restaurant concept known for its menu of Chicago-style favorites, today announced the launch of an underwritten public offering of 8,000,000 shares of Portillo’s Class A common stock (“Class A common stock”). The underwriter has a 30-day option to purchase up to an additional 1,200,000 shares of its Class A common stock.
The proposed offering is considered non-dilutive, as Portillo’s expects to use the net proceeds to (a) purchase limited liability company units of PHD Group Holdings LLC held by certain existing holders (and cancel the associated shares of the Company’s Class B common stock (the “Class B common stock”)) and (b) repurchase shares of Class A common stock from certain existing holders, each in a “synthetic secondary” transaction. As a result, Portillo’s will not receive any proceeds from this offering. Upon close of the transaction, the Company’s total common stock share count, comprised of shares of Class A and Class B common stock, will remain the same; however, the amount of shares of Class A common stock will increase by the same amount of the decrease in the number of shares of Class B common stock. After this offering, it is expected that approximately 61,554,064 shares of Class A common stock and 11,579,326 shares of Class B common stock will be outstanding (or, if the underwriters’ over-allotment option is exercised in full, 62,438,104 shares of Class A common stock and 10,695,286 shares of Class B common stock).
BofA Securities is acting as the sole underwriter of the offering.
The underwriter proposes to offer the shares of Class A common stock from time to time for sale in one or more transactions on the Nasdaq, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices.
The offering is being made pursuant to an effective shelf registration statement (including a prospectus) filed by Portillo’s with the Securities and Exchange Commission (“SEC”) to which this communication relates. Before you invest, you should read the prospectus in the shelf registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the offering. The offering will be made only by means of a free writing prospectus, the prospectus and the related prospectus supplement. A copy of the free writing prospectus, the prospectus and the related prospectus supplement relating to the offering may be obtained, when available, by visiting the SEC’s website at www.sec.gov. Copies of the free writing prospectus, the prospectus and the related prospectus supplement for the offering may also be obtained, when available, by contacting BofA Securities, NC1-022-02-25, 201 North Tryon Street, Charlotte, NC 28255-0001, Attn: Prospectus Department, Email: dg.prospectus_requests@bofa.com.
This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Portillo’s
In 1963, Dick Portillo invested
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). All statements other than statements of historical fact are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business, and are based on currently available operating, financial and competitive information which are subject to various risks and uncertainties, so you should not place undue reliance on forward-looking statements. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “commit,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “pursue,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other similar expressions.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and our ability to maintain our lower interest expense, expand our store footprint, execute our strategy and achieve our goals, among the other risks identified in our most recent Annual Report on Form 10-K and subsequent filings with the SEC, which filings are available on the SEC’s website at www.sec.gov.
The forward-looking statements in this press release are expressly qualified in their entirety by these cautionary statements and are made only as of the date hereof. Portillo’s undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
Investor Contact:
Barbara Noverini
Investors@portillos.com
Media Contact:
ICR, Inc.
PortillosPR@icrinc.com
FAQ
What is the purpose of Portillo’s Inc. (PTLO) underwritten public offering?
How many shares are being offered in the underwritten public offering by Portillo’s Inc. (PTLO)?
Who is the sole underwriter of the underwritten public offering for Portillo’s Inc. (PTLO)?
Where will the shares of Class A common stock be offered for sale by the underwriter for Portillo’s Inc. (PTLO)?
How many shares of Class A common stock will be outstanding after the underwritten public offering by Portillo’s Inc. (PTLO)?
