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Selmon May Face Eatery Bid Upset

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By MICHAEL SASSO

The Tampa Tribune

Published: August 9, 2008

TAMPA - Buccaneers great Lee Roy Selmon's plan to buy and expand the restaurant bearing his name appears to have collapsed.

In October, Selmon and business partner Peter Barli announced they planned to buy a majority stake in the Lee Roy Selmon's restaurant chain from owner OSI Restaurant Partners of Tampa.

However, in a June 2 filing with the Securities and Exchange Commission, OSI said the purchase agreement expired and the deal did not close. A lack of financing was listed as a reason that Selmon and Barli couldn't close on the deal.

As of Friday it was unclear whether they had secured financing in the intervening two months. Selmon and Barli, who is president of the Selmon's chain, did not respond to calls this week.

In an e-mail response Friday, OSI Executive Vice President Joe Kadow declined to elaborate on the deal beyond what is mentioned in the SEC filing.

The regulatory filing also notes that OSI - which owns Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill and other restaurant brands - had been trying to sell its upscale Roy's chain, but took it off the market because of poor market conditions.

The collapse of the deal appears to be a blow for the Selmon's restaurant brand and for OSI.

When they announced the deal last fall, Selmon and Barli said they planned to expand rapidly, building from six restaurants to 30 in five years. The two were part of a larger investment group that would purchase 80 percent of Selmon's and assume control by Dec. 31 of last year. OSI was to retain the other 20 percent.

The restaurant's Web site lists six restaurants, three of which are in the Tampa Bay area and three in Southwest Florida.

For OSI, the sale was a way for the company to shed one of its smaller brands. Restaurant industry analysts have expected OSI to sell some brands partly to pay down the debt it accrued when the company was sold to private equity firms Bain Capital Partners and Catterton Partners last year. OSI had just less than $1.9 billion in long-term debt as of March 31, according to June's filing. By comparison, it had $155.6 million in long-term debt on March 31, 2007, just before the merger.

In Kadow's e-mail to the Tribune, he said OSI has long-range plans to exit "non-core" restaurant concepts, including Selmon's, Roy's, Cheeseburger in Paradise and Blue Coral Seafood & Spirits.

"We are operating under no set timetable for those exits," he said.

If Selmon and his investor group are having trouble getting financing, it wouldn't be surprising, said Dean Zuccarello, whose Denver advisory and investment banking firm, Cypress Group, arranges financing for restaurant and franchise companies. Financing for restaurant and all other buyouts has becoming much tighter recently.

What deals are getting done tend to be "plain vanilla" deals featuring long-established brands, such as one company buying out a big Taco Bell or Burger King franchisee, Zuccarello said.

Lenders are much less likely to fund buyouts of smaller restaurant companies, such as Lee Roy Selmon's and Roy's, and company-owned restaurants that don't have franchisees, he said.

"It is harder to get financing to do things like this," Zuccarello said of the Selmon's deal.

Reporter Michael Sasso can be reached at msasso@tampatrib.com or (813) 259-7865.

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