Wednesday, September 9, 2009

A second attempt by Landry's chairman (LNY)

AlphaNinja - The chairman and CEO of Landry's Restaurants (LNY) is making another attemp to take the company private. Honestly, I say LET HIM take the shares off your hands. If he liked it in the mid-teens last summer I'm sure he still likes it at ten.

The company has about 175 restaurants, origionally Landry's Seafood. They own Saltgrass Steakhouses in Texas, and Chart House restaurants on the East Coast, as well as the Golden Nugget Casino in Las Vegas. Their buying spree included the Rainforest Cafe in 2001, and has resulted in a massive debt load of $930million, versus a company market value of $172million. The company claims to be in compliance with all debt covenants.

Today the company announced that it is exploring alternatives to another "indication of interest" from the founder and chairman, Tilman Fertitta, owner of over half the common stock. Amazingly, Mr. Fertitta offers to let the rest of the shareholders decide the fate of this deal, ignoring his stake in the voting outcome. Maybe there are honest souls out there...

Mr. Fertitta further indicated that he would be willing to have approval of the transaction conditioned on the affirmative vote of the holders of a majority of the Company's common stock not owned by him. Mr. Fertitta also noted as part of the transaction that he anticipated refinancing the Company's outstanding debt and Saltgrass would have stand-alone debt at an appropriate level with terms supportive of higher unit growth.

Landry's is expected to post a loss this year, then a mild profit in 2010. They used to earn $40million in net income. EBITDA peaked at $162million - today that would be an EV/Ebitda of 6, certainly a fair price to unload your shares to the chairman.

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