GALVESTON Texas Landry’s Restaurants Inc. reached a settlement Aug. 20 with bondholders that had demanded immediate repayment of $400 million in unsecured notes, which Landry’s said could have caused it “irreparable harm.”
Landry’s agreed to pay 9.5-percent interest on its formerly 7.5-percent notes, and it has the option to redeem them in 18 months, or the bondholders can call them.
Landry’s had asked a federal judge to make permanent a temporary injunction against bondholders Post Advisory Group and Lord Abbett Bond-Debenture Fund. They had claimed that the chain operator had violated credit agreements when it failed to file its 2006 annual report on time.
Landry’s chief executive Tilman Fertitta was quoted as testifying in an Aug. 16 hearing that he hadn’t “felt so backed into a corner” in his nearly 30 years in the restaurant business, and that Landry’s had risked being forced into involuntary bankruptcy.
Attorneys for Houston-based Landry’s compared the bondholders to vultures, but their lawyers called the issue a contractual matter.
After the settlement, Fertitta said he was pleased Landry’s executives could refocus on “running the company and completing all of our projects.”
Chief financial officer Rick Liem said: “It was important at this time to retain the bonds in our capital structure and maintain our existing $300 million bank revolving credit facility.”