Logan's Set For IPO

NASHVILLE, TN-CBRL Group Inc., which operates the Cracker Barrel Old Country Store and Logan’s Roadhouse brands, has received approval from its Board of Directors to sell off Logan’s Roadhouse through an initial public offering.

The move is one of three strategic initiatives for the company, which also plans to obtain $1.25 billion in unsecured debt through Wachovia Securities to buy back up to $800 million of it stock. CBRL Group operates 536 Cracker Barrel Old Country Store restaurants and gift shops in 41 states and 133 company-operated and 24 franchised Logan’s Roadhouse restaurants in 20 states.

The divestiture of Logan’s is expected to be completed by the end of the fourth quarter of fiscal 2006 or during the first quarter of fiscal 2007, according to a company statement. The Wachovia loan, which will include $800 million conventional bank term loan, a $250 million bank revolving credit facility, and a $200 million delayed draw term loan, is expected to close by May 15, 2006.

“By divesting Logan’s, we’re recognizing that a developing growth concept represents a different risk-reward opportunity than Cracker Barrel with its strong, established brand, more moderate growth rate and strong cash generating capabilities,” said CBRL Group Chairman, President and CEO Michael Woodhouse during an investor conference call. “With the divestiture of Logan’s, we’ll be in a position to focus on the considerable opportunities that we see to improve the performance of the Cracker Barrel business as it is today, and at the same time, develop opportunities to capitalize on the strength of the Cracker Barrel brand in the eyes of the consumer.”

The company was unable to offer additional detail on the Logan’s Roadhouse IPO because of SEC regulations. The casual dining chain’s IPO is just one of several restaurant IPOs that have occurred recently include Morton’s Steakhouse and Chipotle. Burger King is in line for an initial public offering as well. The appetite for restaurant stocks returned recently after a spate of restaurant IPOs including Boston Market left a bad taste in investors’ mouths, according to industry observers.