Karcher Enterprises to Buy Founder’s Stock : Fast food: The Anaheim-based company will spend $10 million to purchase about a million of the 6,160,186 shares currently held by Carl N. Karcher.

Carl Karcher Enterprises, parent company of the Carl’s Jr. fast-food chain, will spend $10 million to repurchase common stock held by founder and Chairman Carl N. Karcher, the company said Tuesday.

A per-share price hasn’t been negotiated, but based on Tuesday’s closing price, the company could acquire about 1.2 million shares for $10 million. Karcher owns a total of 6,160,186 shares, or 34% of the Anaheim company’s outstanding shares, through the Carl N. and Margaret M. Karcher Trust.

Karcher Enterprises shares closed up 25 cents Tuesday at $8.375 in NASDAQ trading.

The company’s founder will use proceeds from the stock sale to “fulfill certain outstanding financial obligations,” said Karcher President and Chief Executive Donald E. Doyle, who described the repurchase plan as a “sound and attractive investment opportunity,” given the company’s long-term earnings prospects.

Doyle also said the stock purchase would avert the “disruption” of having so many of the company’s shares sold in the market.

Last year, Karcher signaled his desire to reduce his holdings by supporting a Los Angeles investment group’s ill-fated bid to take the company private. Karcher’s board of directors rejected the $9.50-per-share offer and instead set in motion a major corporate streamlining that is designed to bolster the company’s profitability.

Karcher reported a $5.5-million net loss for the year ended Jan. 25, compared to a $13-million net profit a year earlier. Revenue fell by 7% to $502.6 million, down from $540.4 million.

Karcher on Tuesday declined to comment on the stock sale, but there are signs that he could use the cash generated by a stock sale.

According to federal Securities and Exchange documents, Karcher in March was obligated to pay off a promissory note on land that is secured by Karcher Enterprises’ corporate headquarters. The note had an estimated unpaid principal of $4.3 million. And, earlier this month, a notice of default was filed at the Oragne County recorder’s office on a vacant tract near the company’s Anaheim headquarters that is owned by the Karcher Trust.

Fast-food industry observers supported Karcher’s planned stock repurchase.

“This is what the company should be doing to create value for shareholders,” said Doug Christopher, an industry analyst with Los Angeles brokerage Crowell, Weedon & Co. “Regardless of who they’re buying the shares back from, they’ll be retired. That’s giving shareholders additional (per-share) value that wasn’t there before.”

Karcher Enterprises in March set aside $15 million to cover costs of the failed attempt to sell itself to Karcher and Freeman Spogli & Co., the Los Angeles-based investment group, and to pay for costs generated by the corporate streamlining.

If the cost-cutting bolsters profitability, shareholders would recoup more than the $10 million, said Bill Davenport, a Newport Beach-based broker who follows Karcher Enterprises.

“It’s a win-win situation, because Carl needs the money and the company isn’t going to borrow to do the purchase,” Davenport said. “Yes, there are costs . . . but they’re more than offset by the reduction in shares out there after it’s done.”

The company has repurchased shares held by its founder on at least two other occasions. In March, 1991, Karcher Enterprises paid $7.075 per share for 180,000 shares, and in July, 1988, it purchased 1.9 million shares at $11.75 per share.

Karcher Enterprises operates or licenses more than 640 Carl’s Jr. restaurants in California, Nevada, Oregon, Arizona, Japan, Malaysia and Mexico. The company has 14,000 employees.