Cara to Sell Shares for C$19-C$22 in C$200 Million IPO

Cara Operations Ltd., a Canadian restaurant company with brands including Swiss Chalet and Harvey’s, aims to sell shares at C$19 to C$22 each in an initial public offering worth about C$200 million ($159 million), according to sale documents.

Cara, owned by Fairfax Financial Holdings Ltd., the Toronto-based insurer that is also a shareholder in BlackBerry Ltd., and members of Canada’s Phelan family, plans to sell subordinated voting shares to pay down debt, according to March 18 documents. That would give the company a market valuation of C$1 billion to C$1.1 billion, the documents said.

Cara seeks to return to the stock markets 11 years after the Phelans took the business private to narrow the company’s focus on restaurants. Cara, based in Vaughn, Ontario, has 837 restaurants across Canada and 10 brands including Milestones, Kelsey’s, Bier Markt and East Side Mario’s, according to filings.

Bank of Nova Scotia, Bank of Montreal and Royal Bank of Canada are leading the IPO, which is expected to price the week of April 6. The banks have the option to sell an additional 15 percent of the offering after the deal closes.

The Phelans founded the business in 1883 as Canada Railway News Company Ltd. to sell newspapers, food, snacks and supplies to travelers on railways and steamships in southern Ontario, according to a Feb. 12 regulatory filing. Cara, which expanded into hotels, restaurants, airline catering and specialty coffee through the 1900s, was listed on the Toronto Stock Exchange from 1968 to 2004. Fairfax stepped in as an investor in October 2013.

Fairfax will have a retained interest of as much as 41 percent of total shares outstanding and Phelan shareholders will retain as much as a 36 percent stake, the documents said. A message left with Cara’s public affairs department wasn’t immediately returned.

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