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July 27, 2007

Is Landry's in trouble?

Landry%27s%20logo.gifCerberus Capital Management's decision earlier in the week to terminate its attempted sale of $12 billion in Chrysler debt underscored the quickly tightening U.S. credit markets (except on oil patch deals!), and the ripple effects are already being felt in Houston. Check out this Houston Business Journal article about Houston-based restaurant company Landry's:

Landry's Restaurants Inc. is looking for new financing to replace its current credit agreement and outstanding 7.5 percent senior unsecured notes.

The Houston-based casual dining chain operator said Wednesday that it would not be able to file its annual report for the year ended Dec. 31 because an internal review of stock option granting practices is not complete.

As a result, Landry's (NYSE: LNY) said it has been notified by U.S. Bank National Association -- the trustee of its $400 million unsecured notes -- that the unpaid principal and any interest is now due.

Landry's expects to be able to refinance the loan, but due to "the recent tightening of the credit markets," it could be under less-favorable financing terms.

The company also said it is not in compliance with a $450 million credit agreement with Wachovia Bank, National Association and other lenders. Landry's expects it can get a waiver of the covenant and does not expect Wachovia to accelerate the indebtedness of the agreement. The amount outstanding is about $97 million.

Late yesterday, Standard & Poor's Ratings Services lowered its credit ratings of Landry's and continued to place the company's ratings on negative watch because of Landry's failure to file its 10K regulatory filing with the SEC for fiscal 2006 and its 10Q for the first-quarter 2007.

H'mm.

Update: Tilman's bad dream.

Posted by Tom at July 27, 2007 12:03 AM |

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