Spicy Pickle Converts Preferred Stock Along With Capital Raise

By: Spicy Pickle | 2 Shares 98 Reads

DENVER, CO--(Marketwire - September 23, 2009) - Spicy Pickle Franchising, Inc. (OTCBB: SPKL), fast casual restaurant operator and franchisor under its Spicy Pickle and Bread Garden Urban Café brands, today announced that it completed two financing transactions. The first one was a private placement whereby the Company will issue approximately 16 million shares of its common stock and warrants to purchase an additional 8 million shares for gross proceeds of $2.1 million.

The exercise of the warrants will bring additional funding to the Company when exercised. The second transaction redeemed approximately 94 shares of the outstanding Preferred Series A shares for $800,000 in cash and converted the remaining preferred shares into common stock. Approximately 308 preferred shares were converted at a rate of $1.25 per common share for which the Company issued approximately 2 million common shares. The balance of approximately 237 preferred shares were converted at a rate of $0.425 per common share for which the Company issued approximately 4.7 million common shares.

Spicy Pickle CEO Marc Geman said, "Importantly, these extremely beneficial transactions show strong belief in our company by the preferred shareholders and the participants in the equity offering. The conversions are considerably above current market and indicate confidence that our company has significant future value. In addition, the conversions eliminate a dividend paying security from our balance sheet and also eliminate provisions of the preferred securities that made additional financing extremely difficult. These transactions provide us with working capital and eliminate an overhang on the market for our stock and an obstacle to future financing.

"The number of shares issued on the conversions is only a fraction of what would have been issued if the preferred securities remained in place based on their price setting provisions. Therefore, we have saved shareholders from considerable potential dilution. It is to their credit that the preferred holders cooperated in this transaction. This gives us the best of both worlds."

Mr. Geman further stated, "With the strain of financing removed we look forward to turning our full attention to our core business which is the franchising of our Spicy Pickle and Bread Garden Urban Café restaurants in the U. S. and Canada and the continued development of healthy and great tasting food for our customers."

About Spicy Pickle®:

Founded in 1999, Spicy Pickle Franchising, Inc. (OTCBB: SPKL) serves high quality meats and fine artisan breads, baked fresh daily, along with a wide choice of eight different cheeses, twenty-two different toppings, and fourteen proprietary spreads to create healthy and delicious panini and sub sandwiches with flavors from around the world. As a leading "fast-casual" concept, Spicy Pickle offers menu items that are far beyond traditional fast food but without the price point of casual dining. The hallmark of a Spicy Pickle restaurant is quality, service and an enjoyable atmosphere. The company is headquartered in Denver, Colorado, with restaurants open across 11 states and more in development nationwide. Spicy Pickle Franchising, Inc. also operates as franchisor for Bread Garden Urban Cafes, a popular café concept in Vancouver over the past 30 years. Bread Garden Urban Cafes serve coffee, pastries and breakfast items as well as lunch and dinner along with a wide variety of desserts. The cafes are a gathering place offering wifi and late night hours in several of the locations. Bread Garden Urban Cafes are found throughout metropolitan Vancouver as well as at Whistler Mountain and the Kamloops Airport in British Columbia.

Forward-Looking Statements:

Certain statements in this press release, including statements regarding the number of restaurants we intend to open, are forward-looking statements. We use words such as "anticipate," "believe," "could," "should," "estimate," "expect," "intend," "may," "predict," "project," "target," and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this press release are based on information available to us as of the date any such statements are made and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: factors that could affect our ability to achieve and manage our planned expansion, such as the availability of a sufficient number of suitable new restaurant sites and the availability of qualified franchisees and employees; risks relating to our expansion into new markets; the risk of food-borne illnesses and other health concerns about our food products; changes in the availability and costs of food; changes in consumer preferences, general economic conditions or consumer discretionary spending; the impact of federal, state or local government regulations relating to our franchisees and employees, and the sale of food or alcoholic beverages; the impact of litigation; our ability to protect our name and logo and other proprietary information; the potential effects of inclement weather; the effect of competition in the restaurant industry; and other risk factors described from time to time in our SEC reports.

###