American Restaurant Group Hires Advisor
American Restaurant Group said Thursday that it hired a financial advisor to help restructure its finances after creditors objected to a plan to sell its Stuart Anderson’s Black Angus chain.
The Newport Beach restaurant company, which also owns the Spoons, National Sports Grill and Grandy’s chains, said it hired Los Angeles investment banker Jefferies & Co. to help refinance $172 million in junk-bond debt.
The debt stems from a 1980s leveraged buyout of the 232-restaurant company by a management team led by Chairman Anwar Soliman.
American Restaurant said it did not get the required approval of bondholders to sell the 101-unit Black Angus steakhouse chain. The company announced in mid-September that two Miami-based companies, TriVest Inc. and Miller Capital Management, had agreed to buy the chain for an undisclosed amount. American Restaurant planned to use the proceeds to make a $41-million interest payment due Sept. 15. The company still has not made the payment.
In a statement, the company said it has devised a refinancing plan that it believes can be completed by year’s end, and has asked bondholders not to demand immediate repayment. The company didn’t say how it planned to refinance the debt, and executives didn’t return phone calls seeking comment.
Because of continued losses, a $227-million working capital deficit and the missed interest payment, auditor Arthur Andersen LLP has said there is “substantial doubt” whether the company can continue as a “going concern.”
In its statement Thursday, the company said its restaurants are “strong and improving” and will be well positioned for growth once the debt burden is relieved.
Figures from American Restaurant’s third-quarter financial report, filed Thursday with the Securities and Exchange Commission, show that the steakhouse chain continues to struggle.
Third-quarter revenue at Black Angus rose 3.6% to $62 million, thanks to the addition of six restaurants. But sales at its established restaurants--a key measure of growth--fell 3.2%. American Restaurant does not break out operating profits for its respective chains.
The company nearly halved its third-quarter loss to $4.6 million from $8.5 million a year earlier. The company turned a $1.1-million profit on operations, but $5.8 million in interest expense plunged it into the red.
Sales for the July-September period fell 1% to $106.2 million from $107.3 million. Sales at the company’s established restaurants fell 2.9%.
At Grandy’s, a Texas-based chain, sales plunged 13.7%, to $19.7 million. Sales at established stores slumped 8.6% as the company increased its discounting and decreased advertising. Grandy’s has closed 19 restaurants since late 1996.
At its Spoons and National Sports Grill chains, sales were flat at $24.5 million, while comparable-store sales slid 2.6%.
For the nine months ended Sept. 29, American Restaurant pared its loss to $12.8 million from a $14.8 million deficit a year earlier. Nine-month sales were virtually unchanged, at $333.1 million.
