Dave & Buster's Says Jefferies Agrees to Buy $100 Million in Stock

Dave & Buster’s Entertainment says the Jefferies investment will help bolster its balance sheet.
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Dave & Buster’s Entertainment  (PLAY) - Get Report said Monday that investment bank Jefferies LLC agreed to buy $100 million in stock to bolster its balance sheet as the dining and entertainment venue operator struggles with the coronavirus economic shutdown.

Shares of the Dallas-based company were tumbling 14.5% to $11.40 in premarket trading.

Dave & Buster's said it also granted Jefferies an option to buy an additional $15 million of shares.

"The company currently intends to use the net proceeds from this offering primarily to strengthen its balance sheet, principally as necessitated by the effects of the COVID-19 outbreak on its business, which could include use for general corporate purposes and/or repayment of outstanding debt," Dave & Buster's said in a statement.

Last month, news reports said that the company was in talks with private-equity firms about a potential stake sale after the coronavirus forced the restaurant-and-arcade chain to shut its locations.

In response to the pandemic, Dave & Buster's shut down its 137 outlets on March 20, furloughed its more than 15,000 hourly employees, reduced store management and corporate staff by 90%, halved senior-management pay, and suspended board compensation for the rest of the year. 

All new store construction has been halted, and capital spending on strategic initiatives, store remodels, games and maintenance has been curtailed. The board also suspended the quarterly dividend and share buybacks.

In January, the private-equity firm KKR disclosed in a regulatory filing that it had taken a 6.3% stake in the entertainment and dining chain.

KKR said it intended “to continue to engage in discussions with management" or the board "about its business, operations, strategy, plans and prospects, from time to time.”