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Einstein Noah Restaurant Group preps leveraged loan backing dividend/recap

Credit Suisse and KeyBanc Capital Markets are launching with a bank meeting at 10:00 a.m. EDT tomorrow a dividend recapitalization for publicly held Einstein Noah Restaurant Group, sources said.

Specifics haven’t emerged yet but the deal will include a five-year revolver and a six-year term loan. The institutional loan will include a 101, one-year soft call premium. The transaction is expected to be governed by total-leverage, interest-coverage and maximum-capex covenants.

The issuer announced today that in addition to continuing to explore a possible business combination or sale of the company, its Board of Directors is considering a possible recapitalization, which may include payment of a special dividend, as part of its continuing review of strategic alternatives to maximize shareholder value.

Einstein Noah, an operator of bagel-bakery cafes in the U.S., also provided a financial outlook for the third quarter ended Oct. 2. It expects total revenue to be roughly $105.5 million, including a roughly 0.2% increase in system-wide comparable-store sales. Net income is expected to grow more than 20% versus the prior year, to roughly $3.4 million Adjusted EBITDA is expected to be roughly $11.7 million for the third quarter of 2012, up 13.6% from $10.3 million for the third quarter of 2011. – Chris Donnelly

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