Lake Forest-based Del Taco LLC said Thursday it has completed a refinancing of its major debt to help the company weather the restaurant industry downturn and aid in expansion plans.
The quirky, Mexican-flavored burger chain, originally part of Nashville-based Sagittarius Brands LLC, struck a $160 million loan and $39 million credit line led by San Francisco-based Wells Fargo & Co. and General Electric Co.’s GE Capital.
The refinancing frees Del Taco from Sagittarius Brands and makes it a stand-alone company.
Sagittarius Brands also had operated Nashville-based Captain D’s Seafood Kitchen and sold that chain to Florida’s Sun Capital Partners Inc., a private equity firm with stakes in Colorado’s Boston Market Corp. and Massachusetts’ Friendly’s Ice Cream Corp.
The refinanced debt stemmed from Sagittarius Brands’ acquisition of Del Taco in 2006.
“The structure of the loan and facility is pretty typical for restaurant companies,” said Steven Brake, chief financial officer for newly created Lake Forest-based Del Taco Holdings Inc. “We have a real focus on making sure we have an appropriate balance sheet that gives us the flexibility to grow and develop the brand.”
New York-based Goldman Sachs Mezzanine Partners LP, a unit of investment bank Goldman Sachs Group Inc., is the new majority shareholder in Del Taco.
Existing investors Charlesbank Capital Partners LLC of Boston and Leonard Green & Partners LP of Santa Monica also increased their stakes in the company.
Sagittarius Brands was owned by two private equity firms, Maryland’s Grotech Capital Group Inc. and Boston-based Charlesbank Capital Partners, which where bought out in the refinancing.
Del Taco, which runs 518 restaurants, had sales of $568 million in 2009.
The company’s growth plans for 2010 include adding five company-owned restaurants and 11 to 13 franchises in various key markets in the U.S.
“Getting this done enables us to really attract new franchisees and support of existing franchisee base with a stable balance sheet,” said Paul Murphy, chief executive of Del Taco.