Phoenix Restaurant Group, Inc. (AMEX: PRG), the owner and operator of the Black-eyed Pea (BEP) restaurant chain and the largest franchisee of Denny’s, today announced that it has received letters of intent to purchase its remaining 97 Denny’s restaurants. Through its advisor, CNL Advisory Services, and a three-month bid and due diligence process, various buyers have submitted offers for varying numbers of restaurants. The total proposed purchase price from these various offers is approximately $76 million in a combination of cash, assumption of debt, and the assumption of certain lease liabilities (primarily real estate related). Management expects to enter into definitive purchase/sale agreements with the various buyers within the next several weeks.
PRG expects to utilize proceeds from the unit sales to reduce outstanding corporate debt obligations, and to satisfy certain working capital requirements. Following the planned divestiture of its Denny’s restaurant portfolio, the Company would focus its efforts solely on growing and further developing its Black-eyed Pea brand. PRG will continue to emphasize enhancing unit economics by adding and testing popular new menu items, and it will commence the exploration of franchising and licensing opportunities for the concept. PRG presently owns and operates 93 units in eight states, with a core concentration in Texas, Oklahoma and Arizona.
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The largest proposed purchaser of the Denny’s restaurants is Huntington Restaurant Group of Scottsdale, Arizona. Assuming the completion of this transaction, Huntington would become the nation’s largest Denny’s restaurant franchisee. Heller Financial has provided a letter of intent to secure Huntington Group with the necessary financing to complete the acquisition.
Rich Beattie, President of Huntington Restaurant Group, commented, “Satisfactory completion of this acquisition would position our company as the largest Denny’s franchise operator in the Denny’s system, focusing on financial strength and operational ability. CNL Advisory Services has handled this process in an exemplary fashion for both the buyers and the seller, and we anticipate consummating this transaction by mid-summer and look forward to a long and rewarding relationship with Heller Financial.”
William G. Cox, President of Phoenix Restaurant Group, stated, “It is with mixed emotions that we near the end of our long relationship with Denny’s. During the past few years our management team has worked diligently with Denny’s Inc. to overcome the effects of discrimination issues, intense industry competition and the refocusing of the popular concept.
The fruits of these efforts have become evident in our sales and margin improvements and an overall enhancement of the performance and image of the Denny’s brand. We wish to express our gratitude and appreciation to all of the employees of PRG and Denny’s Inc. whose efforts throughout the years helped make our Denny’s the best they could be.”
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By GlobalDataAbout Phoenix Restaurant Group
Phoenix Restaurant Group (formerly DenAmerica Corp.) operates full-service, family-oriented and casual dining restaurants, based primarily on the Company’s own Black-eyed Pea restaurant concept. Company restaurants are located primarily in the Southwest, Midwest and Western regions.
Except for the historical information in this press release, this press release includes forward-looking statements that involve risks and uncertainties, including, but not limited to, competitive pressures from within the restaurant industry, changes in the prices of food and beverages, quarterly fluctuations in results, the management of growth, and other risks detailed from time to time in the Company’s Securities and Exchange Commission filings. Actual results may differ materially from management expectations.
