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Sagittarius Brands, Inc. announced on Thursday that they have sold the nation's second largest fast-food seafood franchisor, Captain D's. It also will move its Mexican fast-food franchisor, Del Taco, from Nashville, Tennessee to Lake Forest, California.
The company did not disclose the selling price of Captain D's.
In need of capital, Sagittarius refinanced its existing debt and sold Captain D's to private investment firm, Sun Capital Partners. The new senior credit facilities, led by Wells Fargo and GE Capital, feature a $160 million term loan and a $39 million revolving line of credit. In conjunction with the new credit facility, Goldman Sachs Mezzanine Partners led a new cash equity infusion into Del Taco with existing investors Charlesbank Capital Partners and Leonard Green & Partners also contributing significant new capital to the recapitalization.
"These transactions result in an improved capital structure for Del Taco, and provide us increased flexibility to support our growth through a sole focus on the Del Taco brand. This, combined with a significantly lower level of debt and cash interest requirements, allows Del Taco to improve cash flows and invest in the business," said Steven Brake, Senior Vice President and Chief Financial Officer for Del Taco Holdings, Inc. "Our management and equity owners are excited about what this recapitalization means for the future of the brand."
With the recapitalization, Del Taco's parent moves from Sagittarius Brands to Del Taco Holdings, Inc., a company that will be located at the Del Taco offices in Lake Forest, California.
A spokesperson for Del Taco said that cash from the recapitalization efforts will help spruce up older company-owned restaurants and create innovative menu items.
In February of 2006, Nashville-based Sagittarius Brands, founded by food service veteran Sid Feltenstein, purchased franchisor Del Taco. In 2009, Del Taco had system-wide sales of $568 million and currently operates 287 company-owned units and 231 franchised locations.
Both Del Taco and Captain D's franchisees have not organized independent franchisee trade associations, one of the key sources of unfettered information on trends, practices, policies, operations, vendors, and franchisor relations for franchisees and franchise buyers. Franchisees from both brands today remain quiet and uncertain about what the new corporate changes mean to their businesses.