Collins Tightens Hold on Naugles With Shake-Up

Collins Foods International moved Monday to solidify its control of Naugles Inc., by rebuilding senior management of the troubled Mexican-style fast-food chain with nine of its own executives.

In all, Collins installed 13 new officers at Orange-based Naugles, in which it holds 51.3% of all common shares.

Because of previous departures, Naugles did not have to dismiss any executives in the reorganization, said Christopher Thomas, new vice president of finance at Naugles. Like other top executives at Naugles, Thomas holds a similar position at Collins foods.

The new leadership, announced Monday but elected at the board of directors meeting on Nov. 12, includes only two longtime Naugles officials.

Richard Bermingham, who has served as president of Naugles since Collins Foods acquired its stake in March, became the chairman and chief executive officer of Naugles, replacing F. Wayne Withers. Withers remains on the Naugles board of directors. Bermingham will continue to serve as president and chief operating officer of Collins Foods.

Samuel Sibert succeeds Bermingham as Naugles’ president and chief operating officer. Sibert also continues both as a vice president of Collins Foods and as president of Kentucky Fried Chicken of California, a 140-store franchise chain owned by Collins Foods.

Profit Expected

Only eight months ago, Naugles Inc. was staggering under the weight of a far-flung operation and $45 million in losses over 30 months. Now, as the fast-food chain is being made over in the image of its well-regarded savior, it should start to show an operating profit, one analyst said.

“At least on an operating basis, a majority of its (stores) are at break-even or profitable,” said Sarah Stack, an industry analyst with the Los Angeles investment firm of Bateman Eichler Hill Richards Inc. Because of recent legal expenses and other non-operating costs, however, Naugles may not show a net profit for another quarter, she said.

The company had an operating profit of $1.8 million for its fiscal first quarter, ended Oct. 23, but a $2.3-million write-down forced it to post a $547,000 net loss.

The threat of bankruptcy--barely a step away last April--has greatly receded, Stack said. She credited the expertise of Collins Foods executives, who had been running Naugles since April under an operating and marketing management contract, for the improved condition.

“Collins has effectively been influencing and managing Naugles for about six months,” she said. “This (change in officers) really just formalizes what’s been going on.”

Other Collins Foods executives named to Naugles posts are Thomas as vice president for finance, John Bayley as treasurer, Wayne Jones as assistant treasurer, Alan Klee as corporate secretary, Matt Jankowski as a senior vice president for operations and Denny Boylin and Bob McCoy as vice presidents. Jones had worked at Naugles before joining Collins Foods earlier this year.

Anita Bent, Naugles’ controller since 1982, kept her post. John Fisher, who joined Naugles in 1972, became a vice president. John Larson and Dan DeMaio, both of whom recently joined Naugles, were named senior vice president for marketing and vice president, respectively.

Traded 111 Franchises

In October, Collins Foods picked up an option for an additional 41% of Naugles by trading 111 of its 251 Kentucky Fried Chicken franchises for 23 million shares of Naugles’ newly created 32.5-cent cumulative convertible exchangeable preferred stock and a $500,000 unsecured promissory note at 10% interest.

It was the operation of the 111 Kentucky Fried Chicken stores that provided Naugles with 83% of its first quarter operating profit.

The agreement also calls for Collins Foods to guarantee a $3 million revolving line of credit to help Naugles meet working capital requirements.

Besides its ownership interests in Naugles and Kentucky Fried Chicken franchises, Collins Foods founded and operates the 506-store Sizzler chain of family steak restaurants and runs six food distribution centers.