HOUSTON Landry’s Restaurants Inc. by its founder and chief executive but also heightens the company’s risks in refinancing $400 million in bonds by February, analysts say. —The worsened credit crunch not only threatens the proposed going-private buyout of
The global financial crisis, Hurricane Ike and the prolonged casual-dining slump led CEO Tilman Fertitta to again lower his bid to acquire Landry’s in a “substantially reduced” going-private buyout of the restaurant-gaming company he founded, Landry’s said this month. —The worsened credit crunch not only threatens the proposed going-private buyout of
Without a takeover by Fertitta, Landry’s “could be in the situation of refinancing those bonds or facing bankruptcy,” said Will Hamilton, a senior analyst and vice president with the Houston investment firm of Sanders Morris Harris Inc. Citing the February deadline for a deal struck with bondholders in August 2007, Hamilton envisioned that Landry’s and its creditors could face “a drawn-out process if they went the route of bankruptcy.” —The worsened credit crunch not only threatens the proposed going-private buyout of
Beyond its statement about Fertitta’s efforts to reduce his buyout offer, Landry’s did not make further comments on the pending deal or related financial matters. —The worsened credit crunch not only threatens the proposed going-private buyout of
After Landry’s Oct. 7 announcement of renegotiations with Fertitta, Paul Westra, an analyst with Cowen & Co., issued a note to investors saying that a “successful takeover is now less likely.” —The worsened credit crunch not only threatens the proposed going-private buyout of
The turmoil was punctuated Oct. 13 when Moody’s Investors Service Inc. dropped its rating on Landry’s debt, which already was at junk status, by two more notches amid reduced consumer spending. Moody’s also downgraded the probability-of-default rating of the company. It also downgraded the debt of Golden Nugget, Landry’s two-casino gaming subsidiary, because of softness in the gambling business. —The worsened credit crunch not only threatens the proposed going-private buyout of
Landry’s, whose 179 restaurants include the Rainforest Cafe, Chart House and Saltgrass Steak House chains as well as the namesake seafood eateries, expects its board of directors to vote on Fertitta’s undisclosed latest proposal in November, though the company said turmoil in the credit markets threatens the deal. —The worsened credit crunch not only threatens the proposed going-private buyout of
The transaction was last valued in June at about $1.3 billion, including Fertitta’s assumption of about $885 million in Landry’s debt, after he lowered his original $23.50-per-share bid to $21 for the 61 percent of Landry’s shares he does not already own. Landry’s shares were trading in the $7-$8 range in early October. —The worsened credit crunch not only threatens the proposed going-private buyout of
Landry’s this month said Fertitta had informed a special committee of the board that he was seeking a further price cut because of the worsened credit crunch, the closure of some Landry’s properties after the September hurricane, and “deterioration in the casual-dining and gaming industries.” —The worsened credit crunch not only threatens the proposed going-private buyout of
Fertitta was negotiating the new terms with Jefferies & Co., which had committed debt financing for the deal, Landry’s said. Wells Fargo also had committed financing for the deal. —The worsened credit crunch not only threatens the proposed going-private buyout of
Landry’s and Fertitta have not yet agreed on new terms, and the company said there was no assurance that a transaction at a reduced price would even be reached. —The worsened credit crunch not only threatens the proposed going-private buyout of
The company’s board had urged shareholders this summer to approve the earlier $21 offer. —The worsened credit crunch not only threatens the proposed going-private buyout of
Observers share Landry’s pessimism that the deal will be done, at least any time soon. —The worsened credit crunch not only threatens the proposed going-private buyout of
Hamilton of Sanders Morris Harris said: “The credit market is awful right now. That is affecting a lot of deals, and certainly this deal.” —The worsened credit crunch not only threatens the proposed going-private buyout of
Hamilton had been bearish on the buyout plan for some time. —The worsened credit crunch not only threatens the proposed going-private buyout of
Fertitta created a private-equity firm called Fertitta Holdings Inc. to buy the nearly 16 million Landry’s shares outstanding. The company previously valued the share purchase at about $415 million. —The worsened credit crunch not only threatens the proposed going-private buyout of
Hamilton said the Landry’s deal is complicated by the results of the Houston-based company’s battle with bondholders last year. —The worsened credit crunch not only threatens the proposed going-private buyout of
“It’s a different scenario for Landry’s than for other companies,” he said. “What is hanging out there is the $400 million in senior notes that need to be refinanced or renegotiated in February 2009.” —The worsened credit crunch not only threatens the proposed going-private buyout of
Landry’s reached a settlement in August 2007 with bondholders who were demanding early payment of $400 million in unsecured notes. After going to court, the bondholders agreed to interest rate increases from 7.5 percent to 9.5 percent and they got the option to call the bonds in 18 months. —The worsened credit crunch not only threatens the proposed going-private buyout of
The refinancing of those bonds “will require finding capital, or coming to an agreement with the bondholders for a consent payment or likely an increase in interest rates,” Hamilton said. “You’d potentially see that increased rate for from the [current] 9.5 [percent] to 11, 12 or 12.5 [percent].” —The worsened credit crunch not only threatens the proposed going-private buyout of
A senior vice president with Sanders Morris Harris has been on Landry’s board since 2001. —The worsened credit crunch not only threatens the proposed going-private buyout of
The deal has some advantages, Hamilton added. Fertitta has stated commitments from Wells Fargo and Jefferies & Co., which have fared better than other financiers. —The worsened credit crunch not only threatens the proposed going-private buyout of
“He’s lucky to have them as partners in this, versus having Lehman Bros. or someone else,” Hamilton said. —The worsened credit crunch not only threatens the proposed going-private buyout of
Fertitta was continuing to negotiate “with Jefferies & Co. about the financing for a transaction at a substantially reduced price.” —The worsened credit crunch not only threatens the proposed going-private buyout of
On Oct. 10, Landry’s reopened its Saltgrass Steak House and Babin’s Seafood House at the company’s Kemah Boardwalk entertainment center south of Houston after making hurricane repairs. The rest of Kemah Boardwalk remained closed, however, and much of it isn’t expected to reopen until next spring. Three of the company’s seven Galveston, Texas-area restaurants are also closed and not expected to open until next year. —The worsened credit crunch not only threatens the proposed going-private buyout of
