HOUSTON Landry's Restaurants Inc. said its chairman, president and chief executive, Tilman J. Fertitta, is negotiating to buy the company at a "substantially reduced price" from the $21 per share he offered in June. This marks the second time Fertitta has lowered his offer to purchase the 61 percent of the company’s shares he does not already own.
Landry's said on Tuesday that Fertitta had informed a special committee of the company's board that he was seeking a lower price because of turmoil in the credit markets, the closure of some properties following Hurricane Ike in September, and “deterioration in the casual-dining and gaming industries.”
Fertitta said he is negotiating new terms with Jefferies & Co., which had committed debt financing for the deal, Landry’s said in a statement. Wells Fargo had also committed financing toward the deal. Landry’s special committee and Fertitta had not yet agreed on terms for a new deal and the company said "there is no assurance that a transaction at a reduced price will even be reached," the statement noted. Previously, Landry’s board had urged shareholders to approve the latest offer presented in June.
At that time, Fertitta and Landry's had agreed on a $21-per-share price, which represented a 25-percent premium from the stock’s price. Fertitta, who already owns 39 percent of the casual-dining, gaming and entertainment company, had reduced that offer from his initial bid of $23.50 a share. On Tuesday, Landry's shares sank nearly 18 percent to close at $10.76.
The June offer placed the total deal’s value at about $1.3 billion, when assuming about $885 million in debt. Fertitta has created a private-equity firm called Fertitta Holdings Inc. to conduct the buyout.
Landry's also noted that its entire Kemah Boardwalk in Texas still remained closed because of hurricane damage. The first restaurant is expected to open in a few weeks, and the project should be entirely open by spring 2009. In addition, three of the company’s seven Galveston-area restaurants are still closed and not expected to open until next year.
Landry’s has 179 casual-dining restaurants and two Golden Nugget casino-hotels as well as other entertainment venues. Its restaurant concepts include Landry’s Seafood House, Chart House, Rainforest Cafe and Salt Grass Steak House.