Purchase of Timber Lodge Survives Market Downturn

The stock market’s slump over the last six weeks may have caused some nail biting by the folks at Santa Barbara Restaurant Group Inc., formerly known as GB Foods Corp. For a while, it looked like the company’s plan to buy a Minnesota-based steakhouse chain might unravel.

Shares of Santa Barbara Restaurant Group, which owns the Green Burrito Mexican food chain, were in a downward slide as the company approached a crucial vote to buy Timber Lodge Steakhouse Inc., a deal that hinged, in part, on the price of the stock. Put simply, the stock failed to hit the $7.50 level that it was supposed to maintain shortly before the deal closed Tuesday. Instead, it averaged $6.28 a share.

On Tuesday, however, the Santa Barbara directors agreed to add another 710,000 shares to its bid for the steakhouse chain to compensate for the lower stock price.

On Wednesday, Timber Lodge Chief Executive Dermot F. Rowland said he’s “very, very relieved” that the deal held together. Timber Lodge is eager to expand westward.

In related transactions, Anaheim-based CKE Restaurants Inc., owner of the Carl’s Jr. hamburger chain, said Wednesday it has sold its subsidiary, JB’s Family Restaurants Inc., to Santa Barbara Restaurant Group for 1 million shares of Santa Barbara’s common stock.

CKE also sold 14 company-operated JB’s Restaurants and two Galaxy Diner restaurants to Timber Lodge for 687,890 shares of Timber Lodge common stock. As a result, Santa Barbara Restaurant Group now operates 62 JB’s coffee shops, 18 Timber Lodge restaurants and six Galaxy Diners. And CKE now owns about 13% of Santa Barbara Restaurant Group.

Ultimately, this means CKE gets to concentrate on selling hamburgers while Santa Barbara can move way beyond burritos.