Swiss Chalet is among Cara's brandsKevin Van Paassen
Prime Restaurants shareholders had better hope the Canadian high-yield bond market has an appetite.
The $6.75-a-share acquisition of Prime by Cara Operations Ltd. depends on Cara raising $75-million in a high-yield bond offering. The trick is, the high-yield market in Canada has been dead quiet since mid-summer, with the last successful sales in July, according to a report Monday from BMO Nesbitt Burns.
Now, with yields having risen to reflect a greater perception of risk, Cara is betting that investors are willing to creep back into the market.
"It's not so much the market has been closed, it's just a repricing [and] a lot of people are waiting to see where that settles," said Greg Woynarski, global co-head of credit capital markets at Scotia Capital, which is leading the transaction.
The road show is just beginning and Cara said it expects the financing transaction to be completed in early November.
There's also said to be at least one more Canadian high-yield deal that's ready to go, but some investors said that the transactions will be tough to get done unless markets continue to rally.
The hope is that Cara is a well-known issuer to Canadian high-yield investors, and it has an easy-to-understand use of proceeds in the acquisition of Prime, which owns well-known restaurant chains like East Side Mario's.
'"We have a known buyers' list who know Cara and who have participated in past," said Mr. Woynarski. "It's a very small deal with a use of proceeds that's very specific."