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Einstein Noah backs away from dividend recap deal, pursues alternatives

Einstein Noah Restaurant Group has decided not to pursue its planned dividend recap deal and will instead focus on other strategic alternatives, sources said.

The reversal comes after Credit Suisse and KeyBanc Capital Markets filled out the loan financing at revised terms.

As noted earlier, the term loan was downsized to $200 million, from $240 million, and pricing has been increased to L+600, with a 1.25% LIBOR floor and a 99 offer price, with 102, 101 call premiums. By contrast, the six-year term loan was launched at L+550, with a 1.25% LIBOR floor and a 99 offer price, with a 101, one-year soft call premium.

Proceeds were earmarked to refinance existing debt and fund a now roughly $114 million dividend, leveraging the issuer at roughly 3.8x against $53 million of adjusted EBITDA, sources said. The original deal called for a $154 million dividend, leveraging the issuer at 4.4x.

The issuer, an operator of bagel-bakery cafes, announced the dividend initiative as it continued to explore a possible business combination or sale of the company. – Chris Donnelly 

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