The market rumor this morning is that Landry's Restaurants, which is about 5x levered, and whose market cap has recently dropped to an almost all time low of $100 million, is trying to raise a new $270 million of 2.5 year notes. The B/Caa1 rated company is seeking gullible mutual fund managers who will find the 14% coupon and 20% yield (88 cent issue price) attractive. Kinda reminds us of Movie Gallery which, with the help of Goldman Sachs, raised about a billion last spring and defaulted before they even paid one coupon.
The bigger picture is that if Landry's does price this deal all talk about how companies can not issue debt must officially cease. With treasuries plummeting on a daily basis, the new issuance bubble in High Yield is back, baby.
As we wrote before, the Landry LBO was scuttled for some very peculiar reasons... And if they are betting the house on this deal which has about a 1% chance of getting done, then the existing equity investors should be really, really mad.
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