Au Bon Pain and LNK Partners, a private equity firm focused on the consumer/retail sector, today announced that they have entered into a definitive agreement under which LNK will partner with management to recapitalize the company. The investment will support Au Bon Pain’s expansion strategy in the United States and in selected global markets.
Boston-based Au Bon Pain today operates 226 bakery cafés systemwide, including company owned locations and franchise cafés in the U.S. and internationally. In 2007, Au Bon Pain generated sales revenue of almost $300 million systemwide.
In the recapitalization transaction, which is expected to close in the first quarter, LNK and Au Bon Pain management will acquire a majority ownership interest in the company. LNK and its affiliates will invest more than $100 million of equity. Compass Group PLC, a leading global foodservice company that owned the company from 2000 to 2005, will remain an equity and strategic partner. An investor group led by PNC Mezzanine Capital, which structured and arranged financing support for management’s 2005 acquisition of Au Bon Pain, and including AlpInvest Partners N.V., will sell its interest in the company.
“Au Bon Pain is poised for significant growth, building on the brand’s 30 years of success in the U.S. and internationally,” says Henry Nasella, a founding partner of LNK Partners. “The company’s management team, which will continue to be led by CEO Sue Morelli, has delivered extraordinary financial results over the past several years, including 33 consecutive quarters of positive comparable store sales and outstanding guest count growth–qualities that distinguish Au Bon Pain as one of the most successful fast casual operators in the restaurant industry. LNK looks forward to partnering with the entire Au Bon Pain team and its entrepreneurial culture as they continue their successful growth plans over the next several years.”
“LNK is the ideal partner for Au Bon Pain at this stage of its growth,” says Sue Morelli, President and CEO of Au Bon Pain. “The LNK team is highly knowledgeable and respected in our sector, and will provide us with valuable strategic guidance and industry insights as we move forward. Au Bon Pain’s balance sheet remains strong, allowing us to achieve our strategic goals.”
Jeff Perlman, a Managing Director of LNK Partners, says, “We are very excited to be backing the Au Bon Pain management team. The Au Bon Pain brand is highly recognized and uniquely positioned with a strong and differentiated consumer value proposition. Further, the company is conservatively capitalized to enable significant future growth.”
CapitalSource, the company’s incumbent lender, has committed to providing the debt financing for the transaction. Intermediate Capital Group will provide junior debt. Piper Jaffray & Co. is acting as financial advisor to LNK, Mark Saltzgaber as consultant, and Kirkland & Ellis LLP as legal counsel. Brookwood Associates is acting as financial advisor to Au Bon Pain, and Nixon Peabody LLP is acting as legal counsel.
