Granite City to Get New Majority Owner
Restaurant chain Granite City Food & Brewery, Ltd., will soon have a new majority owner.
St. Louis Park-based Granite City recently announced that it has signed a letter of intent with Concept Development Partners, LLC (CDP), which will provide equity financing and facilitate debt financing.
Specifically, CDP will purchase $9 million of Granite City's newly issued convertible preferred stock and arrange for $10 million in debt financing, according to Granite City. The financing will allow Granite City to buy back 3 million shares of outstanding common stock from major shareholder DHW Leasing, LLC.
Granite City didn't indicate how much of a stake the deal will give CDP other than to say that it “will result in a change of control of the company.”
CDP is a partnership formed by Dallas-based private equity firm CIC Partners and former McDonald's executive Robert Doran of CDP Management Partners, LLC.
Doran, a 35-year restaurant industry veteran, will take the reins at Granite City's CEO after the transaction closes. Steven Wagenheim, Granite City's current CEO, will assume the roles of president and founder at that time.
The deal is subject to shareholder approval. After it closes, Granite City's board will gain several new members. Fouad Bashour, a partner with CIC Partners, will serve as chairman. Meanwhile, Mike Rawlings, CEO of Legends Hospitality and former president of Pizza Hut, and Louis Mucci, former chief financial officer of BJ's Restaurant and Brewhouse and chairman of PriceWaterhouseCoopers National Restaurant practice, will become directors.
Dunham Capital Management, LLC-an affiliate of DHW Leasing-has agreed to reduce fixed rent on certain properties leased to Granite City by an aggregate of $300,000 per year, according to Granite City.
“We are pleased that CDP recognizes the tremendous progress we've achieved over the past two years to grow and improve our stores during a difficult economy,” Wagenheim said in a statement. “We are thrilled to be teaming with Rob Doran and his partners, and to benefit from the great management experience of CDP.”
Granite City has struggled somewhat in recent years amid the turbulent economy. The company reported a net loss of $9.6 million, or $2.53 per share, in 2009-an improvement from the net loss of $15.8 million, or $5.85 per share, in 2008. Financial figures for 2010 have not yet been released.
Granite City is among Minnesota's 75-largest companies based on revenue, which totaled $85.8 million in 2009-down from $96.3 million in 2008.