Dave & Buster's Mulls Sale of Stake to Private Equity Due to Virus Closings

Dave & Buster's is in talks to possibly sell a stake in the restaurant-and-arcade chain to private equity, according to a news report.
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Dave & Buster's Entertainment  (PLAY) - Get Report is in talks with private-equity firms about a potential stake sale after the coronavirus forced the restaurant-and-arcade chain to shut its locations, according to a news report.

Shares of the Dallas company at last check were 6.2% higher at $10.67.

Dave & Busters is discussing a form of investment known as private investment in public equity as part of a range of financing options it is exploring, CNBC said, citing sources.

Such a deal could result in a buyout firm owning a significant stake in company.

In January Dave & Buster's said that KKR had taken a 6.3% holding.

On Thursday, Dave & Buster's reported fourth-quarter net income of $25 million, or 80 cents a share, compared with $29.4 million, or 75 cents, in the year-earlier quarter.

Revenue totaled $347.2 million, up from $331.8 million. 

The FactSet consensus had called for earnings of 69 cents a share on revenue of $344.5 million.

Comparable-store sales decreased 4.7%.

In addition, the company 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 company said.

The board also suspended the  quarterly dividend and share buybacks. Dave & Buster's shut down its 137 outlets on March 20.

"The company is also in discussions with its lenders and outside debt and equity providers to amend necessary terms of its credit facility and further supplement its liquidity," the company said in a statement.

Dave & Buster's did not immediately respond to a call for comment.