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Tilman Fertitta of Landry's Restaurants Makes Buyout Offer
to Take Golden Nugget Casino Private

By Arnold M. Knightly, Las Vegas Review-JournalMcClatchy-Tribune Regional News

Nov. 4, 2009--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.

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.

The Associated Press contributed to this report.


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