Skip navigation

Landry’s ends buyout bid by founder Fertitta

HOUSTON Landry’s Restaurants Inc. said Monday it terminated the going-private bid by its founder and chief executive, and instead will refinance about $400 million in debt.

The company, which saw its shares fall 33.9 percent to close at $8.16 on Monday, said the pending buyout was scrapped because of a conflict with securities regulators that could have jeopardized the company’s alternative financing needed to restructure its debt. The U.S. Securities and Exchange Commission had requested certain information that Landry’s and its lenders deemed confidential, the company said. By not providing that information, Landry’s current tender offer to redeem its notes, which it started last month, could continue.

“Given our need to refinance approximately $400 million in senior notes, and the existing worldwide credit crisis, we felt that it was in the best interests of our stockholders to terminate the merger agreement in order to maintain the alternative financing,” said Michael Chadwick, chairman of Landry’s special committee, which evaluated the buyout plan.

He acknowledged that the buyout’s termination “must be extremely disappointing to our shareholders.”

The pending going-private offer, constructed by chairman Tilman Fertitta and first offered last June, totaled $13.50 per share and was approved by Landry’s board of directors in October 2008. Including debt, the deal was valued at more than $1 billion. The original per-share offer was $21. Landry’s shares have traded between $7.30 and $21.89 per share during the past 52 weeks.

Landry’s lenders in the deal included Jefferies Funding LLC, Jefferies & Co. Inc., Jefferies Finance LLC and Wells Fargo Foothill. The two companies set up by Fertitta to execute the buyout included Fertitta Holdings Inc. and Fertitta Acquisition Co.

The Houston-based company operates about 179 restaurants under such brands as Landry's Seafood House, The Chart House, Rainforest Cafe, Saltgrass Steak House and Charley’s Crab. It also owns entertainment and gaming venues, including two Golden Nugget Hotel & Casino properties in Las Vegas and Laughlin, Nev.

In late December, Landry’s started cash tender offers for its $400 million in senior notes, which were due in 2014, because it needed to refinance the debt by February, according to an agreement reached with bondholders in an August 2007 court settlement. The legal battle pitted Landry's against company bondholders who demanded early payment after claiming that the late filing of Landry's 2006 annual report and its first-quarter results violated bond covenants and put the company in technical default.

Landry's agreed to settle by giving the bondholders the option to call the notes in 18 months, which would be next month, and offered higher rates. To avoid having the holders call the bonds in February, Landry's must refinance its debt or reach an agreement with investors for a consent payment or new interest rates.

Landry’s said that “despite the termination of the going-private transaction, the lead lenders have agreed that the alternative financing to provide the company the ability to refinance its outstanding 9.5 percent notes and 7.5 percent notes will proceed.”

Also in December, Landry’s said it had signed an $81 million credit agreement through Wells Fargo Foothill, a division of Wells Fargo & Co., and Jefferies Finance LLC. The agreement included a senior credit facility of $50 million and a $31 million term loan for use in paying down debt and for general corporate purposes.

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish