Funds Raised for Restaurant Buy-Out

W.R. Grace & Co. said that Drexel Burnham Lambert Inc. has obtained financing commitments for approximately $275 million in connection with the previously announced $776-million management-led buy-out of the company’s Irvine-based restaurant group.

Grace previously had obtained a commitment from Citibank to lead a consortium of banks to raise up to $325 million for the transaction.

The restaurant group, with annual sales in excess of $1 billion, operates more than 800 restaurants. Included in the leveraged buy-out are the Coco’s, Carrows, jojos, Darryl’s, Baxter’s, Reuben’s, Charley Brown’ and the Gladstone’s 4 Fish restaurant chains.

Also included in the transaction is El Torito, which operates 190 Mexican restaurants nationwide. Last week, Grace began a $20.5-per-share cash tender offer for the 27.5% of El Torito shares that it does not already own.

The sale of the restaurant group is part of a restructuring at Grace, which also includes the sale of its retail operations. Grace will continue to operate an international chemical company and have interests in natural resources and selected consumer services.

Grace estimates its after-tax profit on the restaurant sale at approximately $114 million.

In addition, Grace will have warrants to acquire a 47% common equity interest in the restructured restaurant company and will purchase $100 million of the new company’s securities.