Dave & Buster’s explores stake sale to buyout firms, sources say

Dave & Buster’s is in talks with private-equity firms about a potential stake sale after the coronavirus forced the U.S. restaurant and arcade chain to shut its venues, people familiar with the matter said on Thursday.

Dave & Busters is discussing a form of investment known as private investment in public equity (PIPE) as part of a range of financing options it is exploring, the sources said. Such a deal could result in a buyout firm owning a significant stake in the Dallas-based company, the sources added.

Dave & Busters did not immediately respond to a request for comment. In its fourth-quarter earnings statement earlier on Thursday, the company said it was in discussions with its lenders and “outside debt and equity providers” to amend its credit facility and “supplement its liquidity”. It did not provide more details.

Private equity firms are lining up to offer PIPE deals to cash-strapped companies that have seen their revenue plummet in the wake of the coronavirus outbreak that has shut down large swathes of the global economy.

Several companies have turned to PIPE deals in recent days to bolster their finances, including car e-commerce platform Carvana, payment firm EVO Payments and online real estate broker Redfin.

Founded in 1982, Dave & Buster’s is an owner and operator of venues that offer entertainment for adults and families such as sports-oriented, video and simulation games. The venues also serve food and beverages. All 137 of them have been shut since March 20.

Private equity firm KKR in January disclosed it had taken a minority stake in Dave & Busters and said it would engage in discussions with the company’s management or board about business, operations, and strategy. On Thursday, Dave & Busters announced a series of measures to preserve cash, including reducing store management and corporate staff by nearly 90{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, furloughing more than 15,000 store hourly team members, and halting new store construction and store remodeling.

The company, which has a market value of $307 million and long-term debt of more than $650 million, said it is also in discussions with landlords and vendors to reduce expenses, extend payment terms and obtain other payment concessions.

U.S. restaurants last month asked the White House and congressional leaders for at least $325 billion in aid to help them weather the coronavirus crisis, saying the industry could shed nearly half of its 15.6 million jobs and a quarter of annual sales.