Luby’s announces deal to sell cafeteria business
Luby’s Inc. (NYSE: LUB) announced on June 22 that the company has reached an agreement to sell the restaurant business Luby’s Cafeteria to a new subsidiary of Calvin Gin.
The purchase by the Gin subsidiary (which will be renamed Luby’s Restaurants Corporation after the closing of the transaction) will include 32 of Luby’s existing restaurant locations, all in Texas, and ownership of the Luby’s Cafeteria brand. The acquisition of the Luby’s cafeteria business does not include any real estate owned by Luby’s, nor any of the Company’s Fuddruckers operations.1 or the company’s culinary contractual service activity. The Fort Worth area property included in the sale is the Forest Hill location.
The structure of the transaction will allow Luby’s to sell its real estate related to its cafeteria-restaurant business to third parties and realize shareholder value. It is currently expected, after the transaction closes, that nearly all employees at the 32 affected locations will be offered positions by the buyer to stay in those stores, a job that will likely total more than 1,000 associates. It is currently expected that the sale transaction of the Luby’s cafeteria operations could provide Luby’s with a value of approximately $ 28.7 million (all of which, except a nominal amount, will be derived from the assumption by the (purchaser of Luby’s bonds and the issuance of notes by the purchaser to Luby’s). There can be no assurance that the Company will realize or receive the full value of such consideration. The company does not currently consider adjusting the estimated liquidation value of the company as a result of this transaction. This amount does not include any value that may be obtained through future sales of the underlying Luby-owned real estate at 25 of the cafeteria locations.
Gin, Buyer’s CEO, said, âWe are delighted to be able to acquire the operation of these Luby’s Cafeteria stores, one of the iconic brands in the Texas restaurant market. This transaction will allow us to continue to serve Luby’s many loyal customers at these sites and provide long-term employment opportunities to the many associates currently on these sites.
Gerald Bodzy, Chairman of the Board of Luby’s, said: âI could not be happier than to see Calvin Gin, along with many of the management team in place, able to carry on the beautiful tradition of Luby’s food and service brand in Texas. which dates back to 1947.
Gin is a member of the legendary Gin family, which created The Flying Food Group by Sue Gin, which has grown to become the third largest airline catering company in North America and provides food preparation services to others including Starbucks, across the country. Gin is currently co-founder or partner of several entities, including Helios Visions, WorkPlate and Charming Studios. Previously, he also held the position of CFO at Blue Plate Catering, Ltd. and Applause Food Services, Inc.
The sale of Luby’s cafeteria operations is another step in the execution of Luby’s previously announced plan to sell its assets, pay off debts, and return remaining cash to shareholders as part of the liquidation and liquidation plan. The company’s previously announced dissolution and approved by its shareholders on November 17, 2020. The company and its financial advisor said they contacted more than 235 entities before accepting the best offer, which came from the Gin Group.
Luby’s actively endeavors to monetize the real estate it owns that are related to its cafeteria and catering business, including the 25 properties that the company intends to sell to one or more third parties who may, in turn, provide the buyer with rental properties. The purchaser will also assume the leases of seven currently leased Luby’s locations. Luby’s is advised by Jones Lang LaSalle on these real estate sales. The Special Committee of the Board of Directors of the Company is advised by Gibson, Dunn & Crutcher LLP on legal matters. The firm is also advised by Sidley Austin LLP on legal transactions. The purchaser is advised by Winston & Strawn LLP on legal matters.
In March, Luby’s finalized the sale of several of its Fuddrucker restaurant properties.
The agreement between Luby’s and the buyer is subject to the normal and customary conditions for transactions of this nature. The transaction is not subject to a financing contingency. The parties currently expect the transaction to close before the end of the company’s current fiscal year.