CAPITAL INSIGHT CLOSES $500 MILLION IN LAST 24 MONTHS
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“In all the deals we completed over the last 24 months, we put together longer-term solutions for our clients,” said Brett Bishov, managing director with investment banking firm Capital Insight. “Given the uncertainty of the future cash flow , for these restaurant companies, we wanted to remove the risk of refinancing or noncompliance until the business could reposition itself.”
Indeed, over that period of time, the Capital Insight has completed more than $500 million in transactions for restaurant companies. A few highlights include:
• As financial advisor hired by Golden Corral franchisee Platinum Corral and approved by the bankruptcy judge, Capital Insight negotiated the plan for a $50 million reorganization of the company, including breaking up two of the company’s master leases.
“It’s unheard of,” said Bishov, of the leases. “Master leases are in place to either reject all or accept all. We were able to terminate the leases of 10 properties, which was a $20 million judgment win for the debtor.”
Since the restructuring was completed, he reported that the company “is on a trajectory at or above pre-pandemic cash flows.” With buffet concepts being hit the hardest during Covid, Golden Corral was one of the concepts able to make it to the other side of the pandemic, he added.
• For multiple Popeyes franchisees in separate transactions totaling $350 million, Capital Insight negotiated a management buy-out (MBO), sale of a majority interest in a company to an institutional investor where management was retained, and sale/leaseback transactions.
The transactions were highly structured and some had a combination of both senior debt and sale/leaseback financing. And, Bishov reports, the MBO was modeled after ESOP programs.
• In a 25-unit, $45 million Taco Bell deal, Capital Insight again negotiated a MBO with an ESOP-like structure. The transaction included senior debt, sale/leaseback financing and seller-structured paper.
• For a 75-unit, fast casual Asian restaurant company with three brands, Capital Insight had worked with the company six years ago on an M&A transaction. Most recently, Bishov reported Capital Insight worked on their recapitalization, negotiating creditor forbearance during the pandemic, and successfully repositioning the company with management.
• Capital Insight advised a regional brewery concept located in the Pacific Northwest that was impaired by the pandemic. “We worked with ownership and management to terminate approximately 10 locations in an out-of-court settlement, and negotiated forbearance with their creditor,” Bishov said. “We were able to obtain a solution that is allowing the company to re-establish its pre-pandemic operations, and they are now seeing the benefit of that.”
Because of the valuations and credit markets at the time, “we were able to take advantage of monetizing equity though structured instruments like senior debt, sale/leasebacks and subordinated debt,” he explained. “Some of these transactions would not be able to get done today because of the credit markets. Were utilized the capital market’s liquidity to monetize certain positions.”
The landscape is different today, but he said, “we still like deals that are big and complicated. Our backgrounds lend themselves to get involved in more esoteric issues.”
Bishov also disclosed he is advising clients to take a critical look at where they are today, financially. “There will be a lot of opportunity in the coming year,” he noted, “but they should make sure they are in the position to take advantage of it.”