(Bloomberg) -- Whataburger, the beloved Texas-based fast-food chain known for its orange and white restaurants and hefty patties, is tapping the leveraged loan market for $340 million to redeem a portion of its outstanding preferred equity.

The closely held restaurant is working with lead bank Morgan Stanley on the transaction, according to people familiar with the matter. Initial pricing discussions for the deal — an add-on to its existing loan — are for a margin of between 300 and 325 basis points over the Secured Overnight Financing Rate, depending on leverage, at a discount price of 99.03 cents, the people said. Commitments are due Wednesday at 5 p.m. New York time and are expected to allocate Thursday.

Whataburger, based in San Antonio, is the latest in a flurry of borrowers storming the leveraged loan market in the first two weeks of the year, the majority of them pursuing opportunistic transactions to lower their interest expenses. Roughly 45 deals are in general syndication, according to Bloomberg estimates. The burger chain plans to use proceeds to buy back preferred equity, a hybrid form of capital that sits between equity and debt and tends to be more expensive that traditional debt financing.

Whataburger traces its origins to Corpus Christi, Texas, where Harmon Dobson opened the first restaurant in 1950. The chain has more than 900 locations across 14 states, from Arizona to Florida, according to the company’s website. Private equity firm BDT Capital Partners acquired a majority stake in Whataburger from the Dobson family in 2019.

Whataburger and BDT Capital didn’t respond to requests seeking comment.

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