Taco Bell franchisee K-Mac to pay out $96 mln dividend to Lee, shareholders

Lee Equity Partners isn’t wasting time getting some of its money back from Taco Bell franchisee K-Mac Holdings Corp.

K-Mac, Fort Smith, Arkansas, is paying out a $96 million dividend to shareholders, Moody’s said in a March 1 note.

Lee Equity acquired K-Mac a little more than a year ago, Buyouts reported in January 2017. It’s not clear how much it paid but Lee Equity typically invests $50 million to $100 million equity per deal. The firm used its Lee Equity Opportunities Fund to invest.

Founded in 1964, K-Mac owns and operates 285 Taco Bell and six Golden Corral franchised restaurants in the south-central region of the U.S., Moody’s said. Annual revenue is about $450 million.

The dividend is part of $470 million in term loans that K-Mac plans to use to refinance $364 million of debt and pay $10 million in transaction fees, Moody’s said. Lee Equity owns a majority of K-Mac.

Lee Equity is the third PE owner of K-Mac. Brentwood Associates sold the franchisee to Lee in December 2017. Brentwood acquired K-Mac in 2011 from Olympus Partners. That deal was valued at $290 million, Buyouts has reported. Olympus scooped up K-Mac in December 2004, Buyouts said.

Thomas H. Lee, the noted dealmaker, founded Lee Equity in 2006 after leaving Thomas H Lee Partners.

Lee Equity, New York, is a middle-market PE firm that invests in sectors including financial, healthcare and business services, consumer and media.

Lee Equity and K-Mac could not immediately be reached for comment.

Action Item: Contact Sam Fiori, K-Mac CEO, at +1 479-646-2053

A Yum Brands Taco Bell is shown in Encinitas, California, on Oct. 3, 2016. Courtesy of Reuters/Mike Blake