NEW YORK CITY -- Wellspring Capital Management LLC will sell Dave & Buster's Inc. for $570 million to a partnership comprised of D&B's management team, led by chief executive Steve Hill, and Oak Hill Capital Partners. The latter is an $8.4 billion private equity firm led by Fort Worth philanthropist Robert Bass. Associated Oak Hill entities control over $30 billion in investments.
D&B's announced the deal this week, and it is expected to close in the second quarter of 2010. According to Businessweek, sources close to the deal said D&B's and Oak Hill are seeking $200 million in loans to finance the acquisition as a leveraged buyout. Reportedly, the buyers plan to use a five-year, $50 million revolving credit line and a six-year, $150 million term loan.
Dave & Buster's chief executive Steven King said Oak Hill will help the company continue to expand the chain and build its brand. The 56-store chain currently has locations in 24 states and Canada; additional D&B's stores are operated internationally as licensed franchises.
D&B's was founded in 1982 as a single store by Buster Corley and Dave Corriveau in Dallas, where it still is headquartered. Between 2004 and 2009, it acquired and converted nine entertainment center restaurants from the bankrupt Jillian's chain, a similar family entertainment concept.
D&B's was a publicly traded company for a period but, after New York-based Wellspring acquired the chain in 2006, it resumed private ownership. The new owners also replaced the company's founders with new management.
In 2008, Wellspring said it planned an initial public offering intended to raise $170 million; those funds were to have been put against D&B's $242 million in long-term debt. At the time of the buyout announcement, a D&B's official told the Dallas Morning News that an IPO is still "probable" by 2012, given a stronger investment climate.
But the public markets have been unreceptive to restaurant stocks, The Wall Street Journal said, leading to the sale to Oak Hill instead of an IPO.
Wellspring managing partner Greg Feldman, who served as D&B's chairman, said the FEC chain had proved a "very successful investment" for the capital firm.