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$750MM target: Dollar General lays IPO red herring on SEC shelf
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Goodlettsville-based Dollar General Corporation today registered with the SEC a draft prospectus for its anticipated initial public offering.

Though Dollar General's net and total proceeds from the anticipated offering are not included in today's filing, the company's calculation of its filing fees and transactions costs indicate a target of $750 million for the offering.

The company states it intends to use proceeds for its IPO to redeem an as-yet unspecified principal amount of senior subordinated notes and senior notes.  The company says it has $1.8 billion in various notes outstanding, as well as a $2.3 billion senior secured term loan facility, which matures in 2014.

Dollar General's much-anticipated, but still tentative step follows by less than two weeks the debut of IPOs from locally based Emdeon Inc. and Cumberland Pharmaceuticals.

Dollar General's common stock was publicly traded from 1968 until July 2007, when, in a transaction valued at more than $7 billion, the company merged with an entity controlled by investment funds affiliated with Kohlberg Kravis Roberts & Co., L.P.  Dollar General is now a subsidiary of Buck Holdings, L.P., a Delaware limited partnership controlled by KKR.

The company notes that while it has no current plans to pay dividends on common stock that may be offered, it does "anticipate paying a special dividend of approximately $200 million to our existing shareholders prior to this offering. This dividend will be paid with cash generated from operations."

In today's filing, the company describes itself, in part, as "the largest discount retailer in the United States by number of stores, with 8,577 stores located in 35 states as of July 31, 2009, primarily in the southern, southwestern, midwestern and eastern United States...  From 1968 through the end of 2008, we grew our store base from 215 in 13 states to 8,362 in 35 states, mostly through organic growth, and grew our annual sales from $40 million to $10.5 billion..."

The company's registration refers to major shareholders who have agreed to support the transaction, including Kohlberg Kravis Roberts & Co., The Goldman Sachs Group, Citigroup Capital Partners, CPP Investment Board, Wellington Management Company and numerous directors and top management.

The book-running managers for the offering are Citigroup Global Markets Inc., Goldman, Sachs & Co., KKR Capital Markets LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc. 

The listed co-managers are:  Barclays Capital Inc.; Wells Fargo Securities, LLC; Deutsche Bank Securities Inc.; and, HSBC Securities (USA) Inc.

Legal counsel for the prospective offering includes Gary Brown of the Nashville office of Baker Donelson Bearman Caldwell & Berkowitz, as well as attorneys with two New York firms: Simpson Thacher & Bartlett; and, Fried, Frank, Harris, Shriver & Jacobson.

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Tags: Baker Donelson Bearman Caldwell & Berkowitz, Barclays Capital, Buck Holdings, Citigroup Capital Partners, Citigroup Global Markets, CPP Investment Board, Cumberland Pharmaceuticals, Deutsche Bank Securites, Dollar General Corporation, Emdeon Inc., Fried Frank Harris Shriver & Jacobson, Goldman Sachs Group, HSBC Securities (USA), IPO, J.P. Morgan Securities, KKR Capital Markets, Kohlberg Kravis Roberts & Co., Merrill Lynch Pierce Fenner & Smith, retailing, SEC, Simpson Thacher & Bartlett, Wellington Management Company, Wells Fargo Securities

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