Some cafeterias and Fuddruckers to remain open, the company says
Luby's Inc., parent to the Luby’s Cafeteria and Fuddruckers brands, is seeking to sell its real estate assets and wind down its operating divisions and will distribute net proceeds to shareholders if it can’t be sold in its entirety, the company said Wednesday.
The publicly traded Houston-based company has been seeking strategic alternatives since last September.
The company said in a press release Wednesday that, “after a careful and thorough review of the company’s operations (including the impact of COVID-19) and the company's strategic options,” Luby’s board “concluded a monetization process will likely unlock more value more quickly and with greater certainty for the benefit of all Luby's stockholders than the other alternatives considered.”
While it continues with the sale of its assets and pays off debt, Luby’s said, “certain of the company's restaurants will remain open to continue serving our guests.”
Chris Pappas, Luby’s CEO and president, said in the statement: "We believe that proceeding with this sale process followed by distributions contemplated under a proceeds distribution plan will maximize value for our stockholders, while also preserving the flexibility to pursue a sale of the company should a compelling offer that delivers superior value be made.”
As of January, Luby’s operated 118 restaurants nationally. The company also franchised 95 Fuddruckers locations across the United States (including Puerto Rico), Canada, Mexico, and Panama. Its Culinary Contract Services division provided foodservice management to 33 healthcare, corporate dining and sports stadium sites.
The company had been struggling to maintain sales even before the coronavirus pandemic was declared in March and led to restrictions on dining rooms.
The sale path “provides for the potential to place the restaurant operations with well-capitalized owners moving forward,” Pappas said.
Luby’s said its special board committee had reviewed a range of available strategic alternatives.
“A number of stockholders have expressed their support for seeking alternatives to continuing operating the company's restaurants in their current form in the present environment and this monetization program will seek to accomplish that task in the most efficient manner,” the company said.
Among transactions Luby’s said it will consider are the sale of the operating divisions (Luby's Cafeteria, Fuddruckers and its Culinary Contract Services division) as well as its real estate, or selling the company in its entirety.
“The process will be conducted in a disciplined, expeditious and cost-effective manner which seeks to maximize returns to stockholders,” the company said. “The company has not established a definitive timeframe for completing this process, which most likely will lead to the adoption by the board of directors of a formal plan of sale and proceeds distribution followed by an orderly wind down of any remaining operations.”
Any planned sale and distribution of proceeds would have to be adopted by the company’s board and approved ty stockholders, the company noted, adding that “there can be no assurance such a plan of sale and proceeds distribution will be adopted by the Board or approved by stockholders.”
Luby’s said it had retained Duff & Phelps Securities LLC to assist it with the sale of Luby's Cafeteria and Culinary Contract Services and retained Brookwood Associates LLC to assist it with the sale of Fuddruckers.
The company noted “there can be no assurance one or more sale transactions will result from this process.”