Just four years after buying the restaurant chain for $18 million (€14.2 million) – and assuming $255 million in debt – Dallas, Texas-based private equity firm Lone Star Funds has agreed to sell Nashville, Tennessee-based Shoney’s to the private equity firm Centrum Equities, also based in Tennessee. Terms of the sale were not disclosed.
Since being taken under Lone Star’s wing, Shoney’s has closed nearly 100 locations. The company currently runs 291 restaurants in 19 states, mostly in the South. Sales at the restaurants have also been on the downswing, with a $30 million drop in sales between 2004 and 2005, when it reported sales of $475 million. Lone Star also sold the Shoney’s-operated seafood restaurant chain Captain D’s for $150 million to two investor groups last year.
Roger Brown, a partner at Centrum Equities, will become the new president of Shoney’s when the acquisition is completed, which is expected to be in September. No other management changes are currently planned.
Centrum Equities is an affiliate of the Chicago-based real-estate developer Centrum Properties, and its investments have been, until now, primarily concentrated in the printing industry. In 2004, it sold Dayton, Ohio-based printing company Crabar/GBF to Texas-based printing products manufacturer Ennis for $18 million in cash.
Lone Star Funds’ principals have organized more than $13.3 billion in private equity funds since 1995. In an unrelated story, the firm has recently been the subject of an investigation by Korean state officials over events surrounding its acquisition of Korea Exchange Bank in 2003.