CKE Nets $46.9 Million From the Sale of 110 Restaurants

CKE Restaurants Inc. said Thursday it raised $46.9 million after taxes from the sales of 45 Hardee’s restaurants and 65 Carl’s Jr. restaurants in four transactions as part of its effort to reduce debts and shift more company-owned stores to franchisees.

The Anaheim fast-food restaurant operator said it sold the Hardee’s shops for a total $15.3 million and the Carl’s eateries for $59.1 million before taxes and other costs.

CKE didn’t identify the buyers by name. It said the biggest of the deals--the $53.3-million sale of 48 Carl’s stores in Los Angeles--was with a current franchisee who bought 12 L.A.-area stores last month.

CKE said in a press release that it used the proceeds of the sales to reduce debt under its senior credit facility--a series of loans--to $229 million as of Tuesday from $400 million in December 1999. The company said it is about $8 million short of its goal to shed $90 million of debt by Dec. 20.

The company, which was facing a Dec. 20 deadline to pay $60 million to its banks, said it is not in default on its loans. An additional $60 million is due in late January.

CKE said it is “diligently pursuing other prospective refranchising and asset sale transactions” to reduce debt further and to satisfy obligations to lenders.

Previously, the company raised $123.6 million through the sales of 341 Hardee’s and 43 Carl’s Jr. restaurants and other assets.

The company, the fourth-largest operator of hamburger restaurants in the nation, took on significant business and financial risks when it acquired the Hardee’s franchise operations in 1997 and 1998.

While CKE revenue tripled, its debt soared as well. And management has had a difficult time revitalizing Hardee’s because of its size--more than 2,700 stores--its poor image and stiff competition, according to a Standard & Poor’s report in May.

The company is trying to revive sales at Hardee’s by improving service and cleanliness. Some outlets now offer table service, charbroiled hamburgers or all-you-can-drink beverage bars.

But the costs of remodeling restaurants have hurt the bottom line.

Earlier this month, CKE posted a larger loss than expected for its fiscal third quarter as increased costs and decreasing sales at Hardee’s restaurants ate into its bottom line. The loss from continuing operations totaled $7.4 million, or 15 cents a share, while analysts anticipated a loss of about 9 cents a share.

CKE also suffered a setback when its tentative deal to sell its Taco Bueno chain to Commercial Revolution in San Diego for about $90 million fell through. CKE said it expects to find another buyer.

The company, through its units, franchisees and licensees, operates 2,724 Hardee’s, 973 Carl’s Jr. and 125 Taco Bueno outlets.