Mexican Restaurant Operator Does $130M Bond Sale

Cypress-based Real Mex Restaurants Inc., which runs El Torito and other Mexican chains, said it completed a $130 million bond sale Wednesday.

The sale brought in about $117 million for Real Mex, after expenses. The company plans to use the money to repay debt due next near.

Real Mex sold 3.5-year bonds promising to pay investors 14% a year. The bonds were priced at 90% of face value, giving buyers an actual yield of 18%.

The bonds were rated as “high yield,” or junk bond status. Debt rater Moody’s Corp. pegged them at “B2″ within its second highest tier of junk bonds, below ratings for the best debt, known as investment grade.

Real Mex runs nearly 190 restaurants, including El Torito and El Torito Grill, Chevys Fresh Mex and Las Brisas Restaurant in Laguna Beach, among others.

Like other restaurant operators, Real Mex is dealing with an industry downturn.

For the first quarter, revenue fell 7% from a year earlier to $128.5 million. Operating income, excluding depreciation and other items, was flat at $8.3 million.

In April, restaurant veteran Richard “Dick” Rivera, a former top executive with Darden Restaurants Inc., took over as chief executive of Real Mex.

Private equity firm Kohlberg Kravis Roberts