Landry's Restaurants Inc.

Galveston, TX: (Aug-20-07) Several bondholders and creditors filed suit against Landry's Restaurants Inc., alleging that the company had fraudulent business practices. The bondholders said Landry's violated credit agreements by failing to file financial information, including its 2006 annual report, on time. Landry's claimed it was delayed in filing financial information on time because of a voluntary review of its stock-option granting practice. The review found no evidence of wrongdoing or fraud, but the company said it did find accounting errors that forced it to revise some financial statements.

In a settlement reached, Landry's agreed to a deal with creditors over repayment of $400 million in unsecured notes. Landry's stated that it wanted to avoid turning to stand-by bank financing, which would be payable in 24 months and come with a $5 million fee and an interest rate of nearly 11%. Landry's original agreement with bondholders called for a 7.5% interest rate for 10 years. Further, under the settlement agreement, the company could re-establish its 10-year financing with the bondholders with either a one-time fee, or a higher interest rate, or both. [GALVESTON DAILY NEWS: BONDHOLDER FRAUD]

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Published on Aug-21-07