Fiesta Restaurant $200 million five-year deal talked at 8¾% to 9%

By Paul Deckelman

New York, July 26 - Fiesta Restaurant Group, Inc.'s $200 million offering of five-year senior secured second-lien notes is expected to yield between 8¾% and 9%, high-yield syndicate sources said on Tuesday.

They said that order books for the deal would close at 1 p.m. ET on Wednesday, except for those accounts meeting with company executives on the U.S. West Coast.

The sources also said that the deal's structure had been changed somewhat to remove a company option to redeem up to 10% of the notes at 103 during the first 2½ years after issue, when the bonds are otherwise non-callable.

The bonds are being sold to qualified investors under Rule 144A with registration rights and Regulation S.

The deal is being done through Wells Fargo Securities LLC and Jefferies & Co.

Fiesta, which operates restaurant chains Pollo Tropical and Taco Cabana, is an indirect, wholly owned subsidiary of Carrols Restaurant Group, Inc., a Syracuse, N.Y.-based restaurant chain operator that plans to spin Fiesta off to its shareholders before the end of the year, thus creating two standalone public companies.

As part of the run-up to that separation, Carrols intends to refinance its existing debt.

Proceeds from the Fiesta bond sale and a concurrent $85 million senior credit facility being entered into by another Carrols subsidiary, Carrols LLC - a $65 million term loan and $20 million revolving credit facility - will be used to repurchase the parent company's $165 million of outstanding 9% senior subordinated notes due 2013 via a tender offer announced on Friday, which will run through Aug. 18. A portion of the proceeds will be used to repay outstanding borrowings under Carrols' existing senior credit facility.

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