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The Pantry Announces Hedge of Convertible Notes Offering Resulting in Approximately 60% Conversion Premium

Posted on: Thursday, 17 November 2005, 09:00 CST

The Pantry, Inc. (NASDAQ: PTRY) today announced that it entered into a seven-year convertible bond hedge and a separate seven-year warrant transaction in connection with the issuance of approximately $135 million of seven-year convertible senior subordinated notes. The convertible note issuance is expected to close November 22, 2005.

The impact of the hedge and warrant transactions, purchased with a portion of the proceeds from the issuance of the convertible notes, is to offset dilution from the conversion of the convertible notes. For the purpose of dilution, the hedge and warrant transactions effectively increase the conversion premium associated with the convertible notes during the term of these transactions from 27.5 percent up to approximately 60 percent, based on the last reported sale price yesterday of The Pantry's common stock on the NASDAQ National Market of $39.29 per share.

This summary of the separate hedge and warrant transactions is qualified in its entirety by the terms of those instruments, copies of which will be filed by the Company on a Form 8-K with the Securities and Exchange Commission.

About The Pantry

Headquartered in Sanford, North Carolina, The Pantry, Inc. is the leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated convenience store chains in the country, with net sales for fiscal 2005 of approximately $4.4 billion. As of September 29, 2005, the Company operated 1,400 stores in eleven states under a number of banners including Kangaroo Express(SM), Cowboys(SM) and Golden Gallon(R). The Pantry's stores offer a broad selection of merchandise, as well as gasoline and other ancillary services designed to appeal to the convenience needs of its customers.

Safe Harbor Statement

Statements made by the Company in this press release relating to future plans, events, or financial performance are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the Company's current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially from the results and events anticipated or implied by such forward-looking statements. Any number of factors could affect actual results and events, including, without limitation: the Company's ability to consummate the offering of the Notes; fluctuations in domestic and global petroleum and gasoline markets; realizing benefits of the fuel supply agreements; the risk that our ability to finance future transactions could be adversely affected due to our recent restatement of certain of our financial statements; our ability to take advantage of expected synergies in connection with acquisitions; the actual operating results of stores acquired; changes in the competitive landscape of the convenience store industry, including gasoline stations and other non-traditional retailers located in the Company's markets; the effect of national and regional economic conditions on the convenience store industry and the markets we serve; the effect of regional weather conditions on customer traffic; financial difficulties of suppliers, including our principal suppliers of gas and merchandise and their ability to continue to supply our stores; environmental risks associated with selling petroleum products; governmental regulations, including those regulating the environment; and acts of war or terrorist activity. These and other risk factors are discussed in the Company's Annual Report on Form 10-K as amended, and in its other filings with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release are based on the Company's estimates and plans as of November 17, 2005. While the Company may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so.

Source: Business Wire

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