Wednesday, November 2, 2011

Dunkin' Update: PEU Management Fees & Secondary Offering

The Carlyle Group, Bain Capital and Thomas H. Lee Partners charged Dunkin' Brands $14.7 million to terminate their management fee arrangement.  That's $4.9 million per private equity underwriter (PEU).  Carlyle's chunk is historically tax free, until it hits their partners/investors as "carried interest," effectively taxed as capital gains.  

PEU Dunkin's initial public offering in July 2011 covered 25.5 million shares.  Round two is for 22 million shares.

Private equity firms Bain Capital Partners, Carlyle Group and Thomas H Lee Partners are the sellers in the secondary offering, which will reduce their stakes from 24.9% each to an expected 19% each after the sale, according to Dealogic. 
It should give PEUs free shares by making up their original investment, yet they still own 58% of the company.  Goldman Sachs, an underwriter of the first Dunkin' IPO, failed to make the cut for round #2.  PEUs don't appreciate a sell recommendation as they near a secondary offering.