Lakewood, Colo.--(BUSINESS WIRE)-- Einstein Noah Restaurant Group (NASDAQ: BAGL), a leader in the quick-casual segment of the restaurant industry operating primarily under the Einstein Bros.® Bagels, Noah's New York Bagels®, and Manhattan Bagel® brands, today finalized the redemption schedule for its $57.0 million in Series Z Preferred stock held by Halpern, Denny & Co.. Based on a series of discussions, the Company has agreed to minimum redemption amounts and redemption dates through June 30, 2010. In addition, the Company also amended its existing senior secured credit facility to expand the options for the redemption of any remaining Series Z Preferred Stock on June 30, 2010.
The finalized schedule requires the Company to redeem $20.0 million of the Series Z Preferred stock on June 30, 2009, $3.0 million on December 31, 2009 and $5.0 million on March 31, 2010. The Company has the flexibility to increase the redemption amounts as well as the frequency of redemptions at its option, at any time through June 30, 2010 based upon the generation of free cash flow as well as the unrestricted cash balance available at that time. However, the Company has agreed to redeem all remaining outstanding shares (including the additional redemption amount) on June 30, 2010 through either its unrestricted cash balance and/or financing alternatives, which have now been enhanced and expanded under the Company's amended credit facility.
Jeff O'Neill, Chief Executive Officer and President of Einstein Noah, added, "Today's announcement demonstrates the cooperative nature of our relationship with Halpern, Denny & Co. and should provide all of our shareholders with a higher degree of confidence that we can meet our financial obligations in a timely manner. We have put in place a crisp minimum payment schedule for future Series Z Preferred stock redemptions through June 30, 2010, and hope to make additional payments concurrent with our generation of free cash. We appreciate the support and flexibility of our lending group in facilitating changes to our credit facility during a very difficult environment at no cost to our shareholders."
As part of the agreement, Einstein Noah's existing senior secured credit facility has been amended and expanded to permit subordinated debt and replacement equity in the form of another issue of mandatorily redeemable preferred stock, provided that neither the replacement subordinated debt nor the preferred stock is payable or redeemable prior to December 28, 2012, which is six months after the due date of the credit facility.
The redemption payments include an additional redemption amount that is 250 basis points higher than the highest rate on funded debt for any unredeemed shares of Series Z Preferred after June 30, 2009. The highest rate on the Company's funded debt is currently 5.52%
Einstein Noah Restaurant Group is a leading company in the quick casual restaurant industry that operates locations primarily under the Einstein Bros.® Bagels and Noah's New York Bagels® brands and primarily franchises locations under the Manhattan Bagel® brand. The company's retail system consists of more than 600 restaurants, including more than 100 license locations, in 36 states plus the District of Columbia. It also operates a dough production facility. The company's stock is traded under the symbol BAGL.
Certain statements in this press release constitute forward-looking statements or statements which may be deemed or construed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "forecast," "estimate," "project," "plan to," "is designed to," "expectations," "prospects," "intend," "indications," "expect," "should," "would," "believe," "target", "trend", "contemplate," "set the foundation for" and similar expressions and all statements which are not historical facts are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors which could cause the Company's actual results, performance (financial or operating), or achievements to differ from the future results, performance (financial or operating), or achievements expressed or implied by such forward-looking statements. These factors include but are not limited to (i) any payments to redeem the Series Z Preferred Stock are subject to a determination that we have legally available funds in accordance with the Delaware Corporation Code which defines "surplus" as assets less liabilities (excluding the Series Z Preferred Stock) less stated capital (the par value) of outstanding shares and (ii) our ability to make redemption payments is dependent upon our ability to generate cash flow.. These and other risks are more fully discussed in the Company's SEC filings.
Source: Einstein Noah Restaurant Group