UPDATE 1-Landry's buyout in doubt as funding eludes Fertitta

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Oct 7 (Reuters) - Landry's Restaurants (LNY.N) CEO Tilman Fertitta may not be able to find funding to complete his takeover of the company at $21 a share, and is in talks with Jefferies and Co to get financing for a deal at a substantially reduced price.

Landry's shares dropped $1.82 to a low of $11.29 in morning trade Tuesday on the New York Stock Exchange.

A special committee of Landry's board, formed to evaluate Fertitta's acquisition offer, has not yet agreed upon terms of a new transaction, the company said in a statement.

In June Houston-based Landry's, which operates the iconic Golden Nugget Hotel & Casino in Las Vegas and several casual-dining outlets including Landry's Seafood House, agreed to be bought by Fertitta for about $1.3 billion, including debt.

Fertitta cited the closure of the company's Kemah and Galveston properties, instability in the credit markets and deterioration in the casual dining and gaming industries as reasons for his trouble with finding debt financing. (Reporting by Divya Nair in Bangalore; Editing by Pratish Narayanan)