Landry's Restaurants holders may put back senior notes on Feb. 28

By Jennifer Chiou

New York, Nov. 12 - Landry's Restaurants Inc.'s announced that holders of its senior notes have the option to require it to redeem the notes beginning Feb. 28 at 101% of face value.

As a result, the company added that the notes are reflected as current liabilities in its financial statements.

In connection with its previously announced merger, Landry's said it has committed financing sufficient to repay existing debt should the merger not be completed. The new financing will carry higher interest rates and more restrictive terms, the company added.

On Nov. 7, the company said that the revised debt commitment letter kept the proposed senior secured credit facility at $300 million but reduced the amount of senior notes to be sold to $250 million from $315 million.

As already reported, the notes are backed by a commitment for a $250 million one-year bridge loan that is led by Jefferies as bookrunner.

The lenders do have the option to shift $50 million from the bank deal to the bond deal.

As before, the credit facility commitment is comprised of a $50 million five-year revolver and an up to $250 million five-year term loan.

Proceeds will be used to help fund the buyout of the company by Fertitta Holdings Inc. for $13.50 per share of common stock. The purchase price was revised last month from $21.00 per share, which is why the amount of notes being obtained was reduced.

As previously noted, the acquisition is anticipated to close in the first quarter of 2009, subject to shareholder approval, which is expected to be sought at a stockholders meeting in December.

If the buyout is not completed, the Wells Fargo Foothill and Jefferies have committed to provide the company with an up to $50 million revolver and an up to $30 million senior secured term loan by Dec. 23, an up to $210 million senior secured term loan by Feb. 1, 2009 (less the amount borrowed under the $30 million term loan), and to purchase up to $210 million of the company's senior secured notes.

The lenders can reduce the term loan amount by $50 million if they purchase an additional $50 million of notes.

Proceeds from the alternative financing will be used to refinance the company's existing bank deal, 9½% senior notes and 7½% senior notes.

Landry's is a Houston-based restaurant, hospitality and entertainment company.

Fertitta is a newly formed entity wholly owned by the company's chairman, president, chief executive officer and original founder, Tilman J. Fertitta, who beneficially owns about 39% of the company's outstanding common shares.

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