Turbulence in Junk Bonds Alters Plan in TW Services Buyout

Jitters in the junk bond market have forced the investment group that agreed to buy TW Services, which owns Denny’s coffee shops, to reduce the amount of these high-yield, high-risk bonds involved in financing the deal.

New York-based Coniston Partners postponed the sale of $1.1 billion worth of junk bonds to be issued as a part of its takeover of TW, which also owns the Hardee’s and El Pollo Loco fast food chains and a 42% interest in Winchell’s Donut Houses.

The takeover of TW is one of the latest deals hurt by a turbulent junk bond market. In recent months, sellers have had to boost bond yields to attract cautious investors.

Paul E. Tierney Jr., one of the principal partners at Coniston, said: “There is enough confusion, shall we say, in the bond market that doing a $1.1-billion bond financing was going to be ill advised.”

Tierney said the $1.1-billion worth of junk bonds would be “substantially reduced” and replaced with funds mostly from Coniston and its investment banker, Donaldson, Lufkin & Jenrette.

A meeting set for today, in which TW shareholders were to vote on the deal, also was postponed. The voting is rescheduled for Nov. 21, when a new offer should be ready, Tierney said.