Chuck E. Cheese parent CEC Entertainment reportedly is considering an IPO about three years after it was taken private by Apollo Global Management (APO) , but recent restaurant public offerings have disappointed investors.
Reuters recently reported that Chuck E. Cheese, the children's restaurant and entertainment chain, is prepping an offering for the second half of the year that could value it at over $1 billion, although the company hasn't yet hired underwriters.
Apollo agreed to pay about $950 million for Chuck E. Cheese in early 2014. Including the assumption of Chuck E. Cheese's outstanding debt, the deal was valued at about $1.3 billion.
Shortly after selling to Apollo, Chuck E. Cheese bought private equity-backed pizza chain Peter Piper for what sources told TheStreet sister publication The Deal was about $120 million.
Apollo doesn't have much experience in the restaurant sector. In 2013, shortly before acquiring Chuck E. Cheese, the firm sold CKE Restaurants, the parent of the Carl's Jr. and Hardee's concepts, to private equity firm Roark Capital. The target generated revenue of $3.9 billion and fetched about $1.75 billion, while Apollo paid $1 billion for it in 2010.
Last February, Moody's Investors Service downgraded Chuck E. Cheese's debt further into junk status, with the firm's Bill Fahy citing "persistently weak credit metrics" in his report.
"The downgrade also incorporates our view that the company's ability to material improve credit metrics over the intermediate term through operating performance alone will be challenging as soft consumer spending and intense competitive pressures persist," Fahy wrote.