Control of Granite City (Nasdaq:GCFB). is changing hands in a tentative deal announced Tuesday. The St. Louis Park-based restaurant chain said it has signed a letter of intent with Concept Development Partners LLC (CDP) for equity financing and to arrange $10 million in debt financing, Granite City said in a news release. Granite City will sell $9 million of new convertible preferred stock to CDP and buy back 3 million shares of outstanding common stock from major shareholder DHW Leasing LLC.Granite City didn’t detail how large a stake the investment would give CDP, but said that the deal would result in a change of control — Granite City’s current total market cap is $14 million. The deal must be approved by shareholders. CDP was formed by former McDonald’s executive Rob Doran and Dallas-based private equity firm CIC Partners. Doran will lead Granite City as its CEO when the deal closes, replacing current CEO Steven Wagenheim. Wagenheim will stay on with the company as president and founder. CIC Partners’ Fouad Bashour will chair Granite City’s board.
In addition, Mike Rawlings, CEO of Legends Hospitality and former president of Pizza Hut, and Louis Mucci, former CFO of BJ’s Restaurant and Brewhouse and chairman of PriceWaterhouseCoopers National Restaurant practice, will join Granite City’s board. Dunham Capital Management LLC, an affiliate of DHW Leasing, will reduce fixed rents on Granite City properties by $300,000 per year under the agreement.
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