HOUSTON Prior to an Aug. 16 court hearing to decide whether $400 million in 7.5-percent, senior, unsecured notes can be accelerated by the note holders and made immediately due, Landry’s Restaurants Inc. said Thursday it had set up a “stand-by” credit facility. But a Landry’s executive said use of the facility could cause “irreparable harm” to the company.
Landry’s, which operates some 200 casual-dining restaurants under various brands as well as hotels and casinos, originally had its notes called last week by the trustee, U.S. Bank. A few days after that, Landry’s obtained a temporary restraining order from the United States District Court for the Southern District of Texas that called for the immediate withdrawal of the acceleration. A hearing is scheduled for Aug. 16 to decide whether that ruling can stand.
Note holders and the trustee had called the notes because Landry’s was not up to date in filing its financial statement for the year ended December 2006. That delay was caused by a voluntary, internal investigation into stock-option granting practices that concluded last week with no findings of misconduct. The company filed its fiscal 2006 report on Friday.
Without revealing the creditors involved, Landry’s said it completed an amendment and waiver to its existing credit facility and obtained committed financing should the $400 million in notes be due immediately.
“The new proposed bank financing is on terms that are clearly less advantageous to the company than under its existing debt structure,” Rick H. Liem, Landry’s executive vice president and chief financial officer, said in a statement. “If we are forced to draw on this stand-by facility, we will be required to pay higher interest, provide more security and have less flexibility on a shorter-term obligation. There is no doubt that there will be irreparable harm to the company if we are unsuccessful with the litigation.”