ORLANDO Fla. Darden Restaurants Inc., owner of the Red Lobster and Olive Garden chains, sold $1.15 billion in debt to help repay the interim credit facility that was used to fund the company’s acquisition of Rare Hospitality International Inc., according to statements filed with regulators on Thursday.
Late last month Darden had secured an interim credit facility to fund its purchase of Atlanta-based Rare, which owns the LongHorn Steakhouse and The Capital Grille brands. The acquisition, which is valued at about $1.4 billion including assumed debt, is near completion, following this month’s finalization of Darden’s tender offer of $38.15 per share of Rare stock.
The sale of the public notes took the form of a three-part deal, facilitated by sole book-running manager Banc of America Securities LLC, the same bank that had arranged Darden’s interim credit facility. The transaction included $350 million in 5.625-percent senior notes due in 2012; $500 million in 6.2-percent senior notes due 2017; and $300 million in 6.8-percent senior notes due 2037. According to the filing, all notes have been rated investment grade by Moody’s, Standard & Poor’s and Fitch Ratings.
Darden operates more than 1,400 restaurants under the Red Lobster and Olive Garden brands, as well as under Bahama Breeze and Season’s 52. It is currently attempting to sell its 73-unit Smokey Bones brand.
Rare, which will become a wholly owned subsidiary of Darden once the acquisition closes, operates 319 restaurants under its LongHorn and Capital Grill brands. The company also franchises four LongHorn units in Puerto Rico.