The trustee of a $400 million unsecured loan to Landry’s Restaurants Inc. is asking for immediate repayment of the balance.

Houston-based Landry’s Restaurants, whose CEO is island native Tilman Fertitta, said Wednesday that it had been notified by U.S. Bank, National Association that the principal, accrued and unpaid interest on all the outstanding 7.5 percent senior unsecured notes were due immediately.

The move forces Landry’s to seek new financing in what it called a tightening credit market.

It may also create a domino effect of other lenders demanding immediate payment of outstanding debt, said a professor of finance who reviewed Landry’s statement.

Landry’s, which operates hotels, restaurants and entertainment venues in Galveston and Kemah, did not disclose the amount outstanding to U.S. Bank and did not return phone calls.

U.S. Bank made the demand after Landry’s delayed filing its annual report for 2006 as it voluntarily reviews its stock-option practices.

By not providing its annual report, the company was in violation of the terms of the credit agreement.

Landry’s said it would be able to refinance the debt, but pointed to recent tightening of the credit markets. The company said the refinancing may be on less favorable terms than it could have obtained a few weeks ago.

Landry’s last year announced a voluntary review of its stock-option practices, which it said would likely affect 2006 results and years before.

Corporations typically allow executives to buy shares at or below market prices as part of incentives or compensation.

Problems arise when option dates are falsified to give executive tax breaks or bigger profits at the expense of shareholders.

In March, Landry’s said a review overseen by its board of directors had been completed and had not uncovered any evidence of intentional backdating or other wrongdoing.

But the review identified certain stock-option awards for which the company had “historically used an incorrect measurement date to determine the amount of compensation expense to be recognized or failed to record compensation expense in accordance with generally accepted accounting principles.”

Independent directors on the company’s audit committee and independent legal counsel are continuing the review, which should be completed in a few weeks, Landry’s said.

On June 14, Landry’s released incomplete first-quarter 2007 earnings results because of the review.

Landry’s said U.S. Bank could not demand unpaid notes unless 25 percent of their holders demanded it.

Also at the time, Landry’s said it had not received any indication from any note holders they would demand it.

Landry’s also is in noncompliance with a $450 million credit agreement with Wachovia Bank, National Association and other lenders.

But, on Wednesday, Landry’s said it did not expect those lenders to demand immediate repayment of the $97 million outstanding on that agreement.

But Praveen Kumar, professor and chair of the department of finance in the C.T. Bauer College of Business at the University of Houston, said Landry’s is vulnerable.

“They’re putting on a brave face,” he said.

Landry’s had obtained a waiver of its covenant from Wachovia that required it to deliver its audited financial statements in a timely manner. But the waiver no longer applied when U.S. Bank accelerated the notes, Landry’s said.

“That completely changed the ballgame,” Kumar said. “They’re running into the domino effect; one violation of not filing normal statements in a timely manner and it’s beginning to affect covenants.”

Landry’s on Wednesday said a $545 million credit facility it recently secured for its Las Vegas casino Golden Nugget isn’t affected by U.S. Bank’s decision to accelerate notes.

“Nor are our other unrestricted subsidiaries,” the company said.

Landry’s has repurchased about $87 million of its common stock this year and has about $93 million of share repurchase authorization remaining. The company’s stock, traded on the New York Exchange, closed Wednesday at $29.92 a share, down 2.86 percent.