Eight months before Dunkin' sold shares to the public in 2011, its private equity owners took a loan out against the company…
Was the loan for expansion? Nope
An acquistion? Absolutely not
The loan was to pay themselves a dividend.
Then they sold shares to the public and used the proceeds to pay back said loan.
That manoeuvre is called a dividend recapitalisation.
The owners take out a loan in the company's name… keep the cash… and leave the debt behind.
Dunkin was eventually taken private in 2020, the 3rd time it has gone from a public to private company.
And now it looks to be making a public appearance for the 4th time.
Because it’s current private equity owner is listing the company, along with Sonic and Arby’s under the name Inspire Brands.
They’re looking for a $20 billion valuation… and you’ll never guess where IPO proceeds are going to go…
Ding ding ding
Paying back more loans!
Yet another example of public market investors subsiding private equity’s gains.
It’s the same story as Jersey Mike’s I wrote about a few weeks ago…
So no, when Dunkin’ goes public for the fourth time… I won’t be partaking… because I don’t fancy being anyone’s exit liquidity.
Oliver