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Not for Peanuts, Trimaran Buys Charlie Brown’s –

Trimaran Capital Partners has agreed to acquire Charlie Brown’s Steakhouse out of Castle Harlan’s portfolio. The firm will pay $150 million for the New Jersey-based restaurant chain in a deal expected to close in February.

To finance the transaction, Bank of America has agreed to provide senior debt, while Trimaran will use capital from its 2000-vintage Trimaran Fund II, a $1 billion vehicle. The deal will be structured with roughly a 50%/50% debt-to-equity ratio.

According to Trimaran Managing Director Andrew Heyer, the firm has been scanning the restaurants sector for quite a while, but up until now has yet to find anything that fit within its needs. “We’ve been very particular about finding the right opportunity,” Heyer said. “We needed our entry point to be a restaurant with a proven concept that is not yet fully developed. We weren’t looking for something too large and mature and we didn’t want a startup either.”

Trimaran believes it was able to find a match in Charlie Brown’s. Heyer said that the restaurant’s atmosphere resembles that of a higher quality steakhouse, such as a Morton’s or a Smith and Wollensky, but the food is sold at the price point around that of an Outback Steakhouse or Applebee’s, albeit without the kitschy flare.

“This is a moderately priced restaurant, but it’s meant to be a finer dining experience,” Heyer said, comparing the concept to that of its lower priced peers. “Demographically speaking, we think this is the direction the world is moving as the baby boomers age. It’s really an underdeveloped concept.”

Charlie Brown’s currently operates 45 restaurants in New Jersey, New York and Pennsylvania. The company also controls the Jolly Trolley and the Office, both of which would qualify as a bar and grill.

Trimaran expects to grow the company by adding new locations in contiguous areas surrounding its base in New Jersey and New York. Additional openings in Pennsylvania as well as groundbreakings in Connecticut and Delaware are expected in the coming years.

Castle Harlan Cashes In

Through the sale, Castle Harlan will realize a return of roughly 4x its $12 million investment. The firm originally acquired the company in 1997, buying the assets out from under former Bruckmann Rosser Sherrill & Co. portfolio company Restaurant Associates for around $50 million. In the sale to Trimaran, Castle Harlan did not pursue a formal auction for the company.

The business has grown steadily under Castle Harlan’s watch. Justin Wender, a senior managing director at the firm, said, “Look, when we bought the business they hadn’t added a new unit in six years. We worked with them on new rollouts and put systems in place to help them grow the business.”

He added that the firm also has some experience in the space, which was useful for the Charlie Brown’s investment. The firm has invested in Morton’s Restaurant Group, McCormick & Schmick Management Group, Caribbean Restaurants, Luther’s Bar-B-Q and Marie Callender’s Restaurant and Bakery.