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Nov. 04, 2009
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Buyout to take casino parent private

Landry's Restaurants board approves top executive's bid

By ARNOLD M. KNIGHTLY
LAS VEGAS REVIEW-JOURNAL

The Golden Nugget is seen from the Fremont Street Experience. The board of directors for Landry's Restaurants, which owns the hotel-casino, on Tuesday accepted Chairman Tilman Fertitta's offer to acquire all of the company stock he didn't already own.
Photo by Craig L. Moran.

Landry's Restaurants on Tuesday announced a buyout deal with its top executive to take the parent company of the Golden Nugget private in a transaction valued at $1.2 billion including debt.

Landry's Restaurants Chairman and Chief Executive Officer Tilman Fertitta had his offer of $14.75 per share in cash accepted by the company's board of directors, a 37 percent premium on Monday's closing price of $10.76 per share.

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    • Fertitta, who owns nearly 55.1 percent of the company's stock, would acquire all shares of Landry's that he does not own. The transaction is subject to Landry's refinancing a portion of its $915.3 million debt load.

    The buyout is subject to approval by the majority of Landry's stockholders controlling the stock not held by Fertitta.

    Bond analyst Barbara Cappaert of KDP Investment Advisors priced Fertitta's out-of-pocket expense to acquire the stock he does not already own at $108 million.

    She added that $437.1 million in debt coming due in 2011 needs to be addressed whether Fertitta buys the company or not.

    "We have been down this road before," Cappaert said in a note to investors. "Funding has always been an issue."

    The buyout agreement comes nearly three weeks before the downtown Golden Nugget opens its new $150 million, 500-room hotel tower. If the expanded hotel-casino survives the economic downturn, the new Fertitta-owned company would benefit from higher valuations, Cappaert said.

    But if the gaming property defaults on its separately held $495 million in term loans, Cappaert said Fertitta would still control a significant restaurant portfolio, much of which comes with significant real estate underlying the assets.

    "Not a bad move for Mr. Fertitta," Cappaert said in the investors note. "We think in either event that the buyout price is cheap" and shouldn't affect the company's debt ratings.

    An initial offer of $21 per share fell apart in October 2008 after Hurricane Ike damaged some of the company's restaurants in Texas.

    Fertitta made a second offer of $13.50 per share that was abandoned in January because of a reluctance to disclose certain details to the Securities and Exchange Commission.

    In September, Fertitta told a special directors committee to begin go-private discussions that would have had a subsidiary, Saltgrass Inc., spun off into a separate company. Landry's shareholders would receive shares in the new company in exchange for shares of Landry's. That offer was rejected by Landry's directors as being inadequate.

    A special committee of the board can continue to solicit other buyout offers for the Houston-based company until Dec. 17, or until the debt refinancing is complete.

    The transaction is expected to close in the first half of 2010 pending regulatory approval.

    Landry's stock rose $2.93, or 27.23 percent, Tuesday to close at $13.69 on the New York Stock Exchange.

    Contact reporter Arnold M. Knightly at aknightly@ reviewjournal.com or 702-477-3893. The Associated Press contributed to this report.

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    David wrote on November 04, 2009 02:33 PM: http://unlimitedfightnews.com/wordpress/?p=1415

    More interesting tidbits on the background of the Fertttas.


    The Donald wrote on November 04, 2009 11:49 AM: Well said Paco - exposing those rodents for the rats they are. How they managed to get through the Nevada Gaming Commission all these years make ZERO sense. The dad should have been IN the black book,not just reading it.


    Louis wrote on November 04, 2009 11:47 AM: She added that $437.1 million in debt coming due in 2011 needs to be addressed whether Fertitta buys the company or not.

    Ha! Ha! Can't wait to see what happens in 2011. Can you say BK?? At least old Tilman will have a few years to live like a rock star in his suite at the always half-empty Golden Nugget downtown.


    Carlos wrote on November 04, 2009 11:46 AM: The bozos at Landry's are getting what they deserve - pennies on the dollar. They turned down $21 a share and settled for $14 just a few months later? Ha! Ha! Ha!


    Dave wrote on November 04, 2009 11:17 AM: When will investors learn not to do business with a Fertitta? They should learn from the past that the Fertittas will only renig on their debt so they can acquire complete ownership at the expense of investors.


    Ken wrote on November 04, 2009 09:58 AM: The Golden Nugget? Who really cares. I am more interested to see if the new mini gold place on Ft. Apache near Russell is going to survive.


    paco wrote on November 04, 2009 07:19 AM: Yes, Tilman Fertitta is related to Frank Fertitta III and Lorenzo Fertitta. They are all part of the notorious mafia families that came from Cefalù, Sicily. They were run out of NYC by the Gambino family in 1937 and moved to Baltimore and Galveston. They controlled gambling there when it was illegal but "tolerated".

    Frank Fertitta Jr. came to Vegas in 1960.

    http://www.nogreaterdeception.com/index.html


    Too_many_criminal_NY_bankers wrote on November 04, 2009 06:33 AM: I don't own shares in this company. I don't like management-led LBOs. These guys get hired to make money for the shareholders (owners), then they muscle them out.


    billb wrote on November 04, 2009 06:30 AM: Is Tilman Fertitta related to the Fertitta's that are involved with Station Casino's?


    Donn wrote on November 04, 2009 06:29 AM: Can you say Harrah's or even more so Stations. When is this going to end.