NEW YORK, September 6, 2005 - Castle Harlan, Inc., the New York-based private-equity investment firm, announced today it had agreed to acquire The Restaurant Company (TRC), operator and franchisor of 483 family restaurants under the Perkins Restaurant & Bakery name. The company operates in 33 states and five Canadian provinces. The transaction is valued at approximately $245 million.
TRC has 152 company-operated restaurants and 331 franchised units. It also owns Foxtail Foods, which has three food-manufacturing plants that supply the Perkins restaurants and third-party food-service distributors. Foxtail's products include pies, cookies and cookie dough, muffins and batter and pancake mixes and syrups.
David Pittaway, a Castle Harlan senior managing director who led the negotiating team, called Perkins "an outstanding concept."
"The company has a consistent history of offering high quality and moderately priced breakfast, lunch and dinner meals that appeal to a broad customer base," he said. "It has an effective, deep and resourceful management team, and its strong corporate infrastructure has produced impressive financial results."
William Pruellage, a Castle Harlan managing director, who will sit on the board of directors, said, "We believe there are significant opportunities for growth. We are confident Perkins will be an excellent investment for Castle Harlan and our limited partners."
Pruellage said the company's total revenues over the past 12 months were approximately $348 million, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were approximately $37.3 million.
Perkins was founded in 1958 in Cincinnati and grew rapidly in the Midwest. In 1979, it became a wholly owned subsidiary of Holiday Inns, Inc. Don Smith, a director of Holiday Inns, bought an ownership interest in Perkins in 1985 and became its chairman and chief executive officer. After a brief period as a publicly owned company, Perkins was recapitalized in 2000, and Smith and BancBoston Ventures became its two principal stockholders.
Earlier this year, TRC had announced that it was analyzing its strategic and financial alternatives and subsequently closed a sale leaseback transaction of its owned real estate valued at approximately $140 million.
Pittaway said that equity for the transaction would be provided by Castle Harlan Partners IV, L.P., a $1.2 billion investment fund raised in 2003. Smith, who is retiring, will continue to own a minority position in the company, and TRC's other senior managers are also expected to participate in the purchase. The transaction is expected to close in September.
Castle Harlan, founded in 1987, invests in controlling interests in the buyout and development of middle-market companies in North America and Europe. Its team of nine managing directors, including its founders, has completed 44 acquisitions with a total value in excess of $7 billion since the firm's inception. The firm traces its roots to the start of the institutionalized private-equity business in the late 1960s.
Castle Harlan also invests in Australia, New Zealand and the Australasian region through its Sydney-based affiliate, CHAMP Private Equity, which is one of Australia's oldest and largest private equity firms.
Castle Harlan's portfolio companies, which employ more than 31,000 people, include Ames True Temper, a leading manufacturer of lawn and garden tools and accessories; Horizon Lines, one of the largest U.S. container shipping companies, and Advanced Accessory Systems, the largest manufacturer of automotive roof racks and tow systems in North America and Europe.