HOUSTON Landry's Restaurants Inc. said Saturday it had accepted a 35.7-percent lower offer from founder and chief executive Tilman Fertitta to buy the 61 percent of the restaurant and gaming company he does not already own.
The adjusted price of $13.50 per share, down from the $21 that Landry’s and Fertitta had agreed upon in June, still marked a 49-percent premium over the company’s Friday closing stock price of $9.08 a share. Fertitta’s original tender offer was $23.50 per share, which Landry’s board accepted in April
Based on Landry’s 16.1 million shares outstanding, as of Aug.4, the new deal would be valued at about $1.1 billion, including $217.9 million to purchase all outstanding stock and $885 million in debt. The original deal was valued at about $1.3 billion.
Earlier this month, Fertitta told the company that because of the credit-market collapse, Hurricane Ike’s damage to the company's Kemah and Galveston properties and the slowdown in the casual-dining and gaming industries, “the financing to complete the merger at the previously agreed upon price was in jeopardy.”
Fertitta has an amended debt-financing commitment with Jefferies Funding LLC, Jefferies & Co. Inc., Jefferies Finance LLC and Wells Fargo Foothill LLC.
The company said Saturday night that “the lenders agreed under the amended debt financing commitment to provide Fertitta with only $500 million in funded debt financing for the acquisition on terms reflecting the current credit market disruption.” The company also said Fertitta negotiated and obtained on behalf of the company an alternative financing commitment from the lenders on terms similar to the terms for the transaction financing in the event the acquisition is not consummated.
That alternative financing, the company said, “would be sufficient to repay the company's existing indebtedness, which is subject to acceleration and redemption starting in December of this year.” It also allows stockholders to vote on the transaction knowing that alternative financing is available to the company.
In August 2008, Landry’s reached a settlement with bondholders who were demanding early payment of $400 million in unsecured notes. After going to court, the bondholders agreed to an interest-rate increase from 7.5 percent to 9.5 percent, and they got the option to call the bonds in 18 months.
Under the amended merger agreement on Saturday, a new “go-shop” provision went into effect. A special committee of the board will solicit other bids for 30 days.
Stockholders are expected to vote on the proposal in December. Closing is expected in the first quarter of 2009. The new expiration date of the lender’s financing is Feb. 15, 2009.
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.