New York-based Smith & Wollensky Restaurant Group (S&W) has announced the closing of a new US$14m secured term loan agreement, which will enable it to significantly reduce occupancy costs at its Las Vegas, Nevada restaurant and provide additional funds for general corporate purposes.
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Under the agreement, S&W is the guarantor of borrowings by its wholly owned subsidiary, S&W Las Vegas, from Morgan Stanley Dean Witter Commercial Financial Services. The funds available under the agreement will enable S&W to exercise its purchase option for the land and building at 3767 Las Vegas Blvd, where the Company operates its 675-seat, 30,000ft² restaurant.
S&W currently holds a long-term lease on the property with an option to purchase the land and building for US$10m. A recent independent appraisal of the property and improvements valued them at US$29.1m. The Company has been approached by hotel developers and operators who are interested in acquiring or leasing a portion of the property for the development of a hotel or time-share; however, no definitive plans for future development have been finalised.
The purchase option on the property is exercisable upon six months’ written notice to the landlord, which S&W expects to give shortly. Accordingly, the actual acquisition of the Las Vegas property is expected to be consummated during the Q1 2003. Following the acquisition, the current rent of US$1.6m per year will terminate.
“Our purchase of the Las Vegas property, with attractive, secured financing and on very favorable terms, should enhance the company’s profitability in 2003,” said chairman and CEO Alan Stillman. “In addition, the Las Vegas transaction highlights S&W’s impressive asset base, which represents a solid foundation for our future growth plans.”
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By GlobalDataThe company has borrowed an initial US$4m under the agreement for general corporate purposes, including its new restaurant development program. These funds are repayable over five years with a ten-year amortisation. When the US$10m acquisition is completed, the balance due on the first advance will be added to the acquisition loan and the entire amount will be payable over ten years with a 20-year amortisation.
