|
Koo Koo Roo: add salsa
|
 |
June 10, 1998: 6:17 p.m. ET
Fast food chain to be acquired by world's largest Mexican restaurant group
|
NEW YORK (CNNfn) - Koo Koo Roo Inc., the fast-food chicken chain headed by world-renowned business tycoon Lee Iacocca, agreed Wednesday to merge with the world's largest operator of full-service Mexican restaurants.
Koo Koo Roo, based in Los Angeles, will be acquired by privately held Family Restaurants Inc., the $462 million parent company of El Torito and Chi-Chi's Mexican restaurants.
Under terms of the deal, Koo Koo Roo shareholders will receive one share of stock in the new company for each share of Koo Koo Roo stock they currently own.
"The timing for the merger is perfect," William Allen, chief executive of Koo Koo Roo, said. "Koo Koo Roo's management is completing a financial restructuring that has reduced overhead by $8 [million] to $9 million per year and is in the process of selling off non-core assets. [Family Restaurants] has the management depth, expertise and proven track record of running a large successful group of restaurants."
In connection with the merger, Family Restaurants will provide a $3 million loan to Koo Koo Roo and it will issue new senior secured discount notes for net proceeds of approximately $21 million.
Moreover, Family Restaurants agreed to expand its working capital line of credit by $20 million.
The transaction will be accounted for as a purchase and the new company will be called Koo Koo Roo Enterprises, Inc.
"We believe the combination of these two companies will produce very powerful synergies and puts us on a solid platform from which we should be able to realize our full growth potential," said Iacocca, acting chairman of Koo Koo Roo.
Kevin Relyea, chairman, president and chief executive of Family Restaurants, will retain his positions in the new company. Iacocca and Allen will join the company's board of directors.
Family Restaurants operates 273 full-service Mexican restaurants in 30 states, the bulk of which are located in California, Ohio, Pennsylvania, Michigan, Illinois and Indiana. The company also operates 21 restaurants outside the United States.
Family Restaurants operate primarily under the Chi-Chi's, El Torito, and Casa Gallardo restaurant names.
Koo Koo Roo operates 38 Koo Koo Roo California Kitchen take-out restaurants in California, Florida, and Nevada.
In addition, the company operates 14 Hamburger Hamlet restaurants in California and Washington, D.C.
Koo Koo Roo also announced the pending sale of its Arrosto Coffee Co. and said it will continue efforts to divest Color Me Mine, a do-it-yourself ceramic pottery concept.
Wednesday's merger announcement failed to invigorate Koo Koo Roo's already sluggish stock.
Shares of the company's stock (KKRO) slipped ½ to close at 2-3/8 on the Nasdaq. 
|
|
|
|
|
|
Koo Koo Roo Inc.
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
