Tilman Fertitta offers $1.3B for Landry’s Restaurants

January 29, 2008 6:36 AM
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Two years ago, Texas restaurateur Tilman Fertitta entered the gaming business, practically following in the footsteps of his cousins, Frank Fertitta III and Lorenzo Fertitta, who were enjoying resounding success with Station Casinos Inc.

Fertitta, whose publicly-traded Landry’s Restaurants Inc. (LNY) had grown dramatically since it went public in August of 1993. The acquisition of the Golden Nugget Hotel/Casino in downtown Las Vegas merely broadened the company’s growing list of businesses, including over 300 restaurants in 35 states, the 35-acre Kemah Boardwalk in Kemah, Texas, and the Galveston Island Convention Center.

In November, 2006, the company added $192 million to its bank account with the sale of its Joe’s Crab Shack chain.

At that time, the company’s shares were trading north of $30 each.

But problems began to unfold last March when the company’s audit committee found discrepancies in the way the company had accounted for certain stock options in years prior to 2000. There was no evidence that intentional backdating of options took place.

However, the financial disclosure required that the company advise the SEC it would delay its filing of required documents for the 2006 period.

Also, the company noted that the failure to provide timely filings would violate certain credit agreements. This latter matter forced the company to seek other financing that resulted in higher interest payments since the affair developed as the country’s credit crunch was erupting.

Through it all, the company’s share price plummeted, finally reaching the mid-teens.

Almost taking a page out of the playbook established by his cousins at Station Casinos which was taken private by a partnership involving the Fertitta family, Tilman Fertitta on Monday advised Landry’s Restaurants Inc. (LNY) board of directors that he was prepared to take the company private in a $1.3 billion deal that valued the shares at $23.50 each.

He indicated in his letter that he was confident he could generate the necessary financing since he was contributing his 39% equity in the company as well as substantial cash equity.

The offer represented a 41% premium over the closing price at the close of trading on Friday.

The directors said they would establish a special committee of independent directors to review the proposal

Harrah’s sold

The deal whereby Harrah’s Entertainment Inc. (HET) would be owned by the partnership of Apollo Global Management LLC and TPG Capital LP was completed as scheduled on Monday. The $90 per share buyout meant that the shares would be delisted from the N.Y. Stock Exchange as of Monday, Jan. 28.

Reportedly the company’s management team, headed by CEO Gary Loveman, would remain with the private equity company.

Because of the recent credit crunch that has made acquiring financial backing for leveraged buyout offers, deals such as the one involving Harrah’s have been suspect of late.

Most notably in the gaming venue is the private-equity buyout of Penn National Gaming Inc. (PENN). The company continues to maintain that the buyout is progressing but no closing date has been set.

Appointments

MGM MIRAGE Hospitality’s plans to expand its development of new luxury hotel brand concepts for destinations both in the U.S. and abroad received a lift last week with the appointment of Michael Evans as executive vice president of global development.

Evans joined MGM MIRAGE Inc. (MGM) from Marriott International Inc. where he served as senior vice president of international hotel development while based in London. He previously had served that company with postings in Hong Kong and Washington, D.C.

Prior to his work with Marriott, Evans, an attorney, had a private practice in Miami, Fla.

Shuffle Master Inc. (SHFL) has appointed two new members to its board of directors. They are John Bailey and James Nelson who will serve as independent members of the board.

Bailey is founder and managing director of Bailey Kennedy LLP law firm while Nelson is chairman and CEO of Eaglescliff Corporation, a wealth management company.

WMS Gaming Inc. (WMS) has promoted Sebastian Salat to the new position of president, WMS International.

Salat had been serving as vice president and managing director of the company’s international business.