Dave & Buster’s said Monday that Jefferies LLC has agreed to buy $100 million in common stock from the struggling eater-tainment company in a move to shore up its balance sheet.
Dave & Buster’s has also offered Jefferies the option to purchase an additional $15 million in shares for up to 30 days following the initial transaction.
“The company currently intends to use the net proceeds from this offering primarily to strengthen its balance sheet, principally as necessitated by the effects of the COVID-19 outbreak on its business, which could include use for general corporate purposes and/or repayment of outstanding debt,” Dave & Buster's said in a filing with the Securities and Exchange Commission.
As of March 20, all 137 Dave & Buster’s locations had temporarily closed due to the coronavirus pandemic. The company furloughed nearly all of its workforce, aside from a small team, and reduced pay and benefits for remaining corporate employees, the company said.
New store construction was put on hold and the company paused spending on remodels, IT upgrades, game upgrades and store maintenance. A planned relocation of the corporate office was eliminated.
“As a result of the temporary closures, we have experienced a material adverse impact on our revenues, results of operations and cash flows,” the company said in the filing. “The situation remains extremely fluid and it is impossible to predict how long it will be before we can open and effectively operate a significant number of our stores, let alone all of them, and what the level of customer engagement will be once stores do reopen.”
On April 30, Dave & Buster’s reopened one of its stores with limited hours and expects more to follow in the coming weeks and months.
Even before the COVID-19 crisis, Dave & Buster’s was struggling. The company released preliminary financial results for fiscal year 2019 ended Feb. 2, in early April, and indicated that same-store sales had declined 4.7% in the fourth quarter and were down 2.6% for the year.
At the time, the company had said it was using temporary relief provided by the SEC to delay filing its 2019 annual report for up to 45 days.
On April 14, Dave & Buster’s said in the SEC filing that the company had sold 6,149,936 shares of its common stock for $75 million and continue to leverage cash-saving options including strategies to defer rent payments and loan extensions.
Dave & Buster’s is not the only chain to take on private investments. Last week former Panera Bread CEO Ron Shaich’s Act III Holdings and investment firm T. Rowe Price invested $70 million in BJ’s Restaurants Inc. And Roark Capital invested $200 million in The Cheesecake Factory Inc. in April.
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