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JPMorgan Chase, Citizens Financial Back Del Frisco’s Acquisition of Barteca Restaurant Group

June 29, 2018, 08:00 AM
Filed Under: Restaurant

Del Frisco’s Restaurant Group, Inc. announced that it has completed its acquisition of Barteca Restaurant Group, consisting of Barcelona Wine Bar  and bartaco, for $325 million in cash, subject to customary adjustments set forth in the purchase agreement for Barteca’s consolidated debt, cash and working capital. Barcelona and bartaco will hereafter be referred to as Del Frisco’s Emerging Brands.

“We are excited to have completed the acquisition and look forward to what we can achieve with our Emerging Brands. Barcelona and bartaco provide the Del Frisco’s portfolio with significant growth and development opportunities, enabling us to capture market share in the experiential dining segment, while mitigating the risk of seasonality and economic downturns from our more steak-centric concepts,” said Norman Abdallah, Chief Executive Officer of Del Frisco’s Restaurant Group, Inc. “The ‘new’ Del Frisco’s will continue our corporate mission of celebrating life in restaurants through great food, wine and hospitality, allowing us to create truly memorable experiences for our guests, empowering our team members, and enabling our shareholders to reap the competitive advantages that our ‘experienced-based’ lifestyle brands provide us in the marketplace.”

Jeff Carcara has been named Chief Executive Officer of Del Frisco’s Emerging Brands, reporting to Norman Abdallah, Chief Executive Officer of Del Frisco’s, and will continue to lead Barcelona and bartaco. Mr. Carcara is being joined by certain members of his senior management team who together will ensure continuity for these brands and thereby limit execution risk.

We have also engaged a leading consulting firm to work on the Emerging Brands’ integration plan. The integration will be paced and sequenced over the next 12-18 months to ease the transition and help us realize an estimated $3 million-$5 million of annualized run rate synergies by 2020.

The transaction was funded with the proceeds from new senior secured credit facilities, which consist of a new $390 million senior secured term loan and a $50 million revolver. 

Piper Jaffray acted as exclusive financial advisor to Del Frisco’s and its Board of Directors and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor. Kirkland & Ellis LLP acted as legal advisor to Barteca. JPMorgan Chase and Citizens Financial Group provided financing for the transaction.

To support the acquisition the company entered into a new credit agreement  with JPMorgan Chase Bank, N.A., as administrative agent and Citizens Financial Group as Joint Lead Arrangers and Joint Bookrunners.

According to a regulatory filing the Credit Agreement provides for (i) senior secured term loans in an aggregate principal amount of $390,000,000 and (ii) senior secured revolving credit commitments in an aggregate principal amount of $50,000,000.

The interest rates per annum applicable to loans under the Credit Facilities are, at the Company’s option, equal to either a LIBOR rate or a base rate, plus an applicable margin. Initially, the applicable margin for the Term Loans is 4.75% for LIBOR loans and 3.75% for base rate loans. The applicable margin for the Term Loans is subject to change following the Closing Date. The applicable margin for loans made under the Revolving Credit Commitments will range from 2.50% to 3.50% per annum for LIBOR loans and 1.50% to 2.50% per annum for base rate loans, in each case, depending on the Company’s consolidated total net leverage ratio. The Company will pay a commitment fee on the unused portion of the Revolving Credit Commitments at a rate that ranges from 0.35% to 0.50% per annum, depending on the Company’s consolidated total net leverage ratio.

The Revolving Credit Commitments mature on June 27, 2023, and the Term Loans mature on June 27, 2025. The Company is required to repay 1% of the principal amount of the Term Loans annually.

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