Parsad Posted July 28, 2011 Share Posted July 28, 2011 A boardmember sent me a snippet stating that Biglari Holdings is recapitalizing Steak'n Shake by $160M through Jeffries? Anyone find anything on that? I'm looking and I don't see anything. From the snippet, it says he's looking at a $20M revolver and $140M 4-year term at 10% annual amortization. If true, he's levering the chain and I believe pulliing the money out to the holding company. Cheers! Link to comment Share on other sites More sharing options...
nhall110 Posted July 28, 2011 Share Posted July 28, 2011 confirmed. dividend recap in the market Link to comment Share on other sites More sharing options...
Parsad Posted July 28, 2011 Author Share Posted July 28, 2011 Not a good idea. Not the amount he's taking out and the rate at which he's borrowing. You start to make mistakes when you get impatient! Cheers! Link to comment Share on other sites More sharing options...
nhall110 Posted July 28, 2011 Share Posted July 28, 2011 why do you say that? Leverage, though high, isn't too crazy. There's plenty of FCF, owned RE assets, plus support from the parent Link to comment Share on other sites More sharing options...
Parsad Posted July 28, 2011 Author Share Posted July 28, 2011 why do you say that? Leverage, though high, isn't too crazy. There's plenty of FCF, owned RE assets, plus support from the parent He's paying 10% annually on it, correct? He's going to have to get a pretty good return on the capital he's taking out. You spend all this time deleveraging because you want a rock-solid balance sheet, and then you lever it up again because you are impatient at deploying capital and need to get your hands on as much as you can. Cheers! Link to comment Share on other sites More sharing options...
nhall110 Posted July 28, 2011 Share Posted July 28, 2011 no...it'll be 5-6% cash interest, then pay off 10% of it a year through amos. Link to comment Share on other sites More sharing options...
Parsad Posted July 28, 2011 Author Share Posted July 28, 2011 That's not too bad then. Still, what's the harm in just gathering the cash flows over time and putting it to work? Cheers! Link to comment Share on other sites More sharing options...
bookie71 Posted July 28, 2011 Share Posted July 28, 2011 Remember that levers work in both directions! Link to comment Share on other sites More sharing options...
shalab Posted July 28, 2011 Share Posted July 28, 2011 It can help increase book value faster. Link to comment Share on other sites More sharing options...
Kuhndan Posted July 28, 2011 Share Posted July 28, 2011 nhall 110, when you say its in the market, do you mean you've confirmed that Jeffers is shopping the deal? Link to comment Share on other sites More sharing options...
nhall110 Posted July 29, 2011 Share Posted July 29, 2011 yes Link to comment Share on other sites More sharing options...
rogermunibond Posted July 29, 2011 Share Posted July 29, 2011 It can help increase book value faster. As well as executive compensation. Munger says always look at incentives. Link to comment Share on other sites More sharing options...
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