Red Lobster plans new debt, including loan, for buyout by Golden Gate

By Sara Rosenberg

New York, May 16 - Red Lobster has received a commitment for new debt financing to help fund its acquisition by Golden Gate Capital, and the new debt will include an institutional loan facility, according to a market source.

Deutsche Bank Securities Inc., GE Capital Markets and Jefferies Finance LLC are leading the debt.

Other funds for the transaction will come from a fully executed $1.5 billion sale-leaseback agreement with American Realty Capital Properties Inc.

Under the buyout, Red Lobster and certain other related assets and assumed liabilities are being acquired for $2.1 billion in cash from Darden Restaurants Inc.

Darden expects to receive net cash proceeds, after tax and transaction costs, of about $1.6 billion, of which around $1 billion will be used to retire outstanding debt and roughly $500 million to $600 million will be deployed for a new share repurchase program in fiscal 2015.

Closing is expected in Darden's first fiscal quarter of 2015, subject to customary conditions and regulatory approvals. The transaction is not subject to shareholder approval or financing.

Red Lobster is an Orlando, Fla.-based casual dining seafood restaurant company.

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