Bonds or Stock? That is the question.

In 1973, Carlos Galendez had dreams but very little money. He spent more than 10 years working as a dishwasher and then a cook for a major restaurant. His dream was to save enough money to start his own Mexican restaurant. In 1975, his dream finally came true. With a loan from the Small Business Administration, he opened his first Casa de Carlos restaurant. His old family recipes and appealing decor helped the business gain immediate success. He repaid his small-business loan within 14 months and immediately opened a second, then third, location. By 1977, Casa de Carlos was the largest Mexican restaurant chain in the nation.

In 1978, the company decided to go public. Carlos believed continued growth was beneficial to the company, and he felt offering ownership was the way to bring in loyal investors. Nevertheless, he made certain his family maintained controlling interest in the firm's stock. Therefore, in its initial public offering, Casa de Carlos offered to sell only 40 percent of the available shares in the company to investors. The Galendez family kept control of 60 percent of the stock.

As the public's craving for Mexican food grew, so did the fortunes of Casa de Carlos, Inc. Heading into the 1980s, the company enjoyed the position of being light on debt and heavy on cash. However in 1985, the firm's debt position changed when it bought out Captain Al's Seafood Restaurants. Three years later, it expanded into full-service wholesale distribution of seafood products with the purchase of Mariner Wholesalers. The firm's debt increased, but the price of its stock was up and demand at all three operations was booming.

In 1990, Carlos Galendez died. His oldest child, Maria, was selected to take control as chief executive officer. Maria had learned the business from her father. He taught her to keep an eye out for opportunities that seemed fiscally responsible. Unfortunately, in 1993 the fortunes of the firm began to shift. Two major competitors were taking market share from Casa de Carlos, and the seafood venture -began to flounder (pun intended). The recession in the early 1990's didn't help either. Consumers spent less, causing some severe cash problems. Maria Galendez had to decide how to get the funds the firm needed for improvements and other expenses. Banks would not expand the firm's credit line. She considered the possibility of a bond or stock offering to raise capital.

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