Buffets Holdings, Inc. Files for Chapter 11 Reorganization to Restructure Balance Sheet and Improve Performance
All 626 Restaurants Open For Business
Company Obtains $385 Million DIP Financing Commitment
EAGAN, Minn.--(Business Wire)--Buffets Holdings, Inc., ("the Company" or "Buffets Holdings")
announced today that, in order to restructure its balance sheet and
strengthen its financial performance, the Company and all of its
subsidiaries, including Buffets, Inc., have filed voluntary petitions
for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The
filings were made in the U.S. Bankruptcy Court for the District of
Delaware, in Wilmington, Delaware.
All 626 restaurants in 39 states are open for business as usual,
and it is anticipated that management and staff will be paid as usual
and will continue to deliver the highest quality food, service and
value to the Company's guests. All group reservations are being
honored as usual and it is anticipated that all other customer
programs and policies, including those pertaining to direct mail
coupons and email coupons, Senior Cards, Gift Cards and special
promotions, will remain in effect.
The Company intends to use the reorganization process to take
additional action to improve its customers' dining experience and help
drive revenue growth and enhanced profitability across its restaurant
brands.
Mike Andrews, Chief Executive Officer of Buffets Holdings, said:
"Our dedication to providing our guests with the highest quality food
and service remains as strong as ever. We do not anticipate any
significant disruptions to our business during the restructuring
process. We intend to pay our vendors promptly for all goods and
services provided after the Chapter 11 filing. We expect that our
37,000 team members will continue to receive their pay and benefits as
usual and I know they will continue to provide outstanding meals and
service to our guests."
He continued, "We intend to use this reorganization process to
make the Company stronger and more financially secure as we continue
to contend with the current challenging operating environment. This
restructuring is driven primarily by the need to reduce the amount of
debt on our balance sheet. We also intend to take action to further
enhance efficiency and profitability across the organization. This
will include performing a thorough review of all underperforming
locations over the next several months to determine if they can meet
our long-term objectives."
The Company believes that a variety of external economic factors
led to a decline in recent operating performance. The leading factor
has been a significant decline in discretionary spending among its
core customers. Higher gasoline and energy costs, increased debt
service loads due to rate increases on adjustable rate mortgages,
lower consumer confidence and the general economic downturn have been
the greatest consumer strains. The disappearance of readily available
credit has compounded their burden, caused by the collapse of the
sub-prime mortgage market, stagnant home valuations, and lower
available home equity due to previous consumer refinancing efforts.
Additionally, the increases in labor costs due to increases in minimum
wage rates, food costs and energy expenses have materially increased
the Company's costs.
To fund its continuing operations during the restructuring,
Buffets Holdings has secured a $385 million debtor-in-possession (DIP)
financing facility from several financial institutions in its current
bank group. Subject to court approval, the DIP credit facility, which
includes $85 million of new funding to supplement $300 million carried
over from the Company's pre-petition credit facility, will be used to
enhance the Company's liquidity during the reorganization process. The
DIP facility will bear interest at the same rate as the pre-petition
credit facility did under the forbearance agreement reached with the
bank lenders several weeks ago. The remaining balance of the Company's
$640 million pre-petition credit facility and the $300 million 12.5%
senior notes due November 1, 2014 remain as outstanding obligations.
Buffets Holdings has filed several "First Day Motions" in the
Bankruptcy Court to support its employees, vendors, customers and
other stakeholders and to ensure that the Company will continue to
provide a full range of food offerings in all of its restaurants, meet
its post-filing obligations to local and national vendors, and honor
its coupons, Senior Cards, Gift Cards and other customer promotions.
Buffets Holdings' legal advisor is Young Conaway Stargatt &
Taylor, LLP. The Company's financial advisors are Houlihan Lokey
Howard & Zukin Capital, Inc. and Kroll Zolfo Cooper LLC.
More information about Buffets Holdings' reorganization is
available in the Company Information section of the Company's Web site
at http://www.Buffet.com or by calling 1-877-649-4745. Claims
information and court filings are available at
http://chapter11.epiqsystems.com/buf.
About Buffets Holdings
Buffets Holdings is the parent company of Buffets, Inc., the
nation's largest steak-buffet restaurant company, currently operates
626 restaurants in 39 states, comprised of 615 steak-buffet
restaurants and eleven Tahoe Joe's Famous Steakhouse(R) restaurants,
and franchises sixteen steak-buffet restaurants in six states. The
restaurants are principally operated under the Old Country Buffet(R),
HomeTown Buffet(R), Ryan's(R) and Fire Mountain(R) brands. Buffets,
Inc. employs approximately 37,000 team members and serves
approximately 200 million customers annually. For more information
about the Company, please visit www.Buffet.com and www.Ryansrg.com.
Safe Harbor Statement
The statements contained in this press release that are not
historical facts are forward-looking statements, including references
to the Company's plans in the context of a bankruptcy reorganization.
These and other forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those set forth in, or implied by, the forward looking
statements. Factors that may cause actual results to differ from the
forward-looking statements in general are described in the "Risk
Factors / Forward-Looking Statements" section in Buffets Holdings'
Form 10-K filed with the Securities and Exchange Commission on
September 25, 2007 and in Buffets Holdings' Quarterly report on Form
10-Q filed with the Securities and Exchange Commission on November 5,
2007. The statements in this release reflect Buffets Holdings' current
beliefs based upon available information. Developments subsequent to
this release are likely to cause these statements to become outdated,
and no obligation is undertaken to update the information.
Media Only:
Kekst and Company
Michael Freitag
Diana Postemsky
Victoria Weld
212-521-4800
Copyright Business Wire 2008
