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Del Frisco’s, Sullivan’s file for IPO

WICHITA Lone Star Funds, the private-equity owner of Lone Star Steakhouse & Saloon Inc., plans to spin off a stake in two of its higher-end brands, Del Frisco’s Double Eagle Steak House and Sullivan’s Steakhouse, through a $100 million initial public offering, the company said Tuesday.

In a preliminary prospectus filed with the U.S. Securities and Exchange Commission, the new company, Del Frisco’s Restaurant Group Inc., would operate six Del Frisco’s restaurants and 16 Sullivan’s locations. Proceeds from the planned IPO would be used to repay debt and to “expand [the] business into new geographic locations,” it said. The prospectus did not outline any growth plans other than one new Del Frisco’s restaurant, which is expected to open in the fourth quarter.

The number of shares being offered to the public and the per-share price has yet to be calculated. Piper Jaffray & Co. is managing the offering.

In its filing, Dallas-based Lone Star Fund said it intends to maintain a controlling interest in the new company, which would trade on the Nasdaq under the ticker symbol FINE.

Private-equity firm Lone Star Funds acquired the Sullivan’s and Del Frisco’s chains when it took Lone Star Steakhouse & Saloon Inc. private for about $585 million in December 2006. The acquired company’s biggest operation remains its namesake steakhouse chain. It also operates the Texas Land & Cattle steakhouse chain.

For the 36 weeks ended Sept. 4, the Del Frisco’s and Sullivan’s operations tallied total sales of $108.3 million, up 7.1 percent from the same period a year ago, according to the prospectus. The increase was due mainly to a same-store sales increase of 6.3 percent at Del Frisco’s and a same-store sales decrease of 0.3 percent at Sullivan’s. Net income for the latest period dropped to $5.5 million from $8.7 million a year ago, mostly because of higher interest expense, the company said.

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