MSD Partners closed an $80 million credit agreement for restaurant franchise Luby’s. The agreement includes a $60 million five-year term loan, a $10 million delayed draw term loan available for nine months after closing and a $10 million revolving credit facility.
The loans carry a variable interest rate with scheduled amortization of $10 million in each of the first two years and $15 million in the third and fourth year. The loans are secured by a first lien on company assets.
The proceeds were used first to repay the outstanding $39.4 million in borrowings and accrued interest on Luby’s credit agreement with its previous bank lenders. The remaining proceeds were used to establish reserves for other commitments, pay financing fees upfront and expenses related to the loan and for general corporate purposes.
After the closing of the new agreement, the company had $60 million in term debt and cash on the balance sheet of approximately $17.8 million.
Chris Pappas, Luby’s president and CEO, commented, “We are pleased to be partnering with MSD Partners on this refinancing, which will give us the funding to execute aggressively on a plan to enhance our operating performance, grow sales, and thereby improve financial results. As we continue our $45.0 million asset sales program, we remain confident that we will be able to reduce our debt balance in the near term and strengthen our financial position.”
Cowen served as exclusive financial advisor and placement agent to Luby’s on the transaction. Bracewell acted as Luby’s legal counsel.
Luby’s operates 142 restaurants nationally: 82 Luby’s Cafeterias, 58 Fuddruckers and 1 Cheeseburger in Paradise. The company also franchises 103 Fuddruckers locations across the United States, Canada, Mexico, Panama and Colombia.
Formed in 2009 and located in New York, MSD Partners is an investment adviser created by the principals of MSD Capital to enable a select group of investors to invest in strategies that were developed by MSD Capital.
