DECATUR, GA-Washington, DC-based Allied Capital Corp. has committed $124.1 million to acquire a majority stake in locally based Huddle House Inc. The funding consists of a senior revolving credit facility, senior term loan, senior subordinated debt and a majority of the company’s common equity. At the close of the transaction on Dec. 21, it had funded $120.1 million of its commitment.

According to a statement from Allied, “the senior management of Huddle House also made a significant debt and equity investment in the company.” An Allied spokesman declined to tell GSR what proportion of the company it acquired, but says, “typically the management-stake in this type of private equity transaction is between 10% and 30%.”

Huddle House is the country’s fifth largest full-service restaurant chain, based on number of franchised units. It operates 400 family dining restaurants in 17 states throughout the Southeast and mid-Atlantic regions as well as in Texas and Missouri. Of those, 123 new units were opened within the past four years.

Best known for breakfast fare, Huddle House serves all day-parts, including lunch and dinner, with full table service. It specializes in moderate price meals and was founded in 1964.

“Allied Capital’s investment in Huddle House is reflective of the company’s strong and stable franchise base, attractive free cash flow characteristics and proven management team,” says Mike Grisius, Allied’s managing director, in a statement. Frank Izzo, a principal of the equity investment firm, says it will partner with management in positioning Huddle House for its next phase of growth.

Phil Greifeld, president and CEO of Huddle House, says Allied Capital has a long-term investment strategy, “making them an ideal partner for our company as we seek to fill in our existing footprint of stores and expand to new markets.”

Allied Capital specializes in providing financing to middle market companies and has total assets of more than $4 billion. It trades on the NYSE under the call letters ALD, and its common stock hit a 52-week high of $32.85 a share on Dec. 21, the day the Huddle House transaction was announced. Its 52-week low of $25.65 a share occurred on this July 18.

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