The two firms are buying TGI Fridays from Carlson, the hospitality and travel company. Financial terms were not disclosed in the May 21 announcement of the deal. However, Moody’s Investors Service said in a note on June 11 that the transaction, which includes about $670 million in debt, calls for Sentinel and TriArtisan to invest $200 million equity.
Sentinel will be TGI Fridays’ majority shareholder, the announcement said. But if the two were to have roughly equal stakes, that would be about $100 million each, sister website peHUB reported. TGI Fridays’ current owner also is providing $20 million of preferred equity, Moody’s said.
Sentinel’s investment comes from its fifth fund, which closed last year at $1.3 billion.
TGI Fridays owns, operates and franchises restaurants in the casual dining space. TGI Fridays has more than 510 restaurants in the United States and 400 internationally, Moody’s said. The company produces roughly $1.13 billion in annual revenues, Moody’s said.
The $220 million equity is 25 percent of TGI Fridays’ $890 million enterprise value. That is lower than the typical 28 to 30 percent equity investment usually provided by buyout shops (Taking out the $20 million provided by the seller, the $200 million provided by Sentinel and TriArtisan is less than 24 percent). But it is not the lowest seen recently.
That honor goes to Bain Capital and Golden Gate Capital, which led a group last year to buy BMC Software. The investor group only contributed $1.25 billion equity to the BMC buyout, or 14 percent of the $8.7 billion deal, peHUB has reported.
The TGI Fridays transaction is expected to close by July, according to the May announcement. Piper Jaffray & Co served as Carlson’s financial adviser for the transaction and Locke Lord LLP served as legal counsel. Kirkland & Ellis LLP served as legal counsel to Sentinel.
Executives at Sentinel and TriArtisan could not be reached for comment.
Luisa Beltran is a senior writer for peHUB.