Sbarro broke around par 1/2-101 and traded up to par 3/4-101 1/4 by day's end Tuesday. The Italian restaurant chain turned to Credit Suisse and Bank of America for financing to back its leveraged buyout by MidOcean Partners, announced in November.
The credit was launched at a bank meeting Jan. 10 as a $25 million revolver and a $150 million term loan "B," but was later increased to a $183 million term loan. Pricing is LIBOR plus 2 1/2% on the loans. There is also $150 million of 10 3/8% notes. Anthony Puglisi, executive v.p. and cfo, said the company increased the term loan because of interest from the market.
Puglisi said that in the fall the company decided to explore strategic alternatives and hired North Point Advisors, a West Cost advisory firm that has worked with a number of restaurants in the past. Sbarro was looking to set up an auction when North Point came in contact with MidOcean. The auction did not take place. A call to a MidOcean partner was not returned by press time.
Puglisi said the firm has a very large pipeline of interested international franchises and will be looking to continue to grow its domestic franchises as well. It will also look to grow its company-owned stores.