RLPC-UPDATE 1-Landry's launches bank loan to repay bondholders
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NEW YORK Aug 10 (Reuters) - Creditors demanding early repayment of a $400 million bond issue forced restaurant chain operator Landry's Restaurants LNY.N to launch on Friday a new $590 million bank loan, investors told Reuters Loan Pricing Corp.
Landry's new loan is the only new deal that has been launched this week as most issuers had decided to hold off from launching new financings due to unprecedented volatility in the loan market.
The financing, which is led by Wachovia Securities, entails an amendment to the company's existing $300 million revolver. Roughly $75 million of that facility is still available as a revolver under the new bank loan, while the remaining $225 million has now been converted into a first-lien term loan. In addition, the company also is issuing a $290 million add-on first-lien term loan.
Price talk on both first-lien term loans is 500 basis points over the London interbank offered rate, while the now $75 million revolver is priced at 475 basis points over LIBOR.
Roughly 11 relationship banks are said to have committed to the $225 million first-lien term loan.
Landry's announced Thursday it would use the new bank loan to repay $400 million of its 7.5 percent senior unsecured notes held by bondholders, who have demanded early repayment.
The bondholders have claimed the Houston-based restaurant chain violated its debt agreement with them when it failed to file timely financial statements.
Landry's, in turn, has disputed that claim, saying it provided sufficient information to its lenders. Nevertheless, the company has gone ahead and obtained the bank financing in the event that it is asked by the U.S. District Court for the Southern District of Texas, Galveston Division, to immediately repay the notes. A hearing is scheduled for Aug. 16.
Rick H. Liem, the company's executive vice president and CFO, said in a statement on Thursday: "The new proposed bank financing is on terms that are clearly less advantageous to the company than under its existing debt structure. If we are forced to draw on this stand-by facility, we will be required to pay higher interest, provide more security and have less flexibility on a shorter term obligation."
((Reporting by Reuters Loan Pricing Corp.; Reuters Messaging: smita.madhur.reuters.com@reuters.net; e-mail: smita.madhur@reuters.com; Tel 646-223-6833)) Keywords: RLPC LANDRYS/
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