SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 29, 1997
EINSTEIN/NOAH BAGEL CORP
Exact Name of registrant specified in its charter
Delaware 0-21097 84-1294908
(State or other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
14123 DENVER WEST PARKWAY
GOLDEN, CO 80401-4086
Address of principal executive offices
Registrant's telephone number: (303) 215-9300
ITEM 5. OTHER EVENTS
BANK COMMITMENT LETTER.
On October 29, 1997, Einstein/Noah Bagel Corp.
(the "Company"), signed a commitment letter with respect
to new term and revolving credit facilities (the "New
Credit Facilities") with Bank of America National Trust
and Savings Association, LaSalle National Bank and
General Electric Capital Corporation (collectively, the
"Lenders"). The New Credit Facilities consist of a $30
million secured term loan facility (the "Term Loan") and
a $40 million secured revolving credit facility (the
"Revolving Credit Facility"). The New Credit Facilities
are subject to the negotiation of definitive
documentation and certain other customary conditions.
ACQUISITION OF CONTROL OF AREA DEVELOPERS
In addition, the Company announced that its
Board of Directors has recommended that the Company
acquire a majority interest in its five area developers,
Colonial Bagels, L.P., Great Lakes Bagels, L.P.,
Gulfstream Bagels, L.P., Noah's Pacific, L.L.C. and
Sunbelt Bagels, L.L.C. (the "Area Developers"), and has
appointed a special committee in connection with such
proposed acquisition. Among other things, the committee
will consider a proposal by the Company's management to
convert the secured loans made by the Company to the Area
Developers into majority ownership of each Area Developer
(the "Conversion") and to merge the Area Developers into
a single entity (the "Area Developer Merger"). The
proposed Conversion would result in the Company owning
approximately 75% of the outstanding equity in each of
its Area Developers with the remaining equity interest
continuing to be owned by area developer management and
other private investors. If the Conversion is completed,
the Company will consolidate the Area Developers'
operations in its financial statements. In such a
consolidation, store sales and profits, and Area
Developer overhead would be reflected on the Company's
financial statements.
If the proposed Conversion is completed, the
Company would expect to report positive cash flow after
overhead in 1998, but depreciation and goodwill
amortization associated with the proposed Conversion are
expected to result in net losses for the year.
The Conversion and the Area Developer Merger
would be subject to various approvals, including approval
of the Conversion and determination of the terms thereof
by the special committee and approval of the Conversion,
the Area Developer Merger and certain related matters by
equity owners of the Area Developers. If approved, the
Company expects that the Conversion would be completed
before the end of the year.
FORWARD LOOKING STATEMENTS
Certain statements in this Current Report on
Form 8-K constitute "forward-looking statements" and
involve known and unknown risks, uncertainties, and other
factors which may cause the actual results, performance
or achievements of the Company, its area developers,
Einstein Bros. Bagels stores and Noah's New York Bagels
stores to be materially different from any performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the
following: competition; success of operating
initiatives; development and operating costs; achievement
of development schedules; advertising and promotional
efforts; brand awareness; adverse publicity; acceptance
of new product offerings; availability, locations and
terms of sites for store development; changes in business
strategy or development plans; availability and terms of
capital; food, labor and employee benefit costs; changes
in government regulation; regional weather conditions;
and other factors referenced in the Company's filings
with the Securities and Exchange Commission. All
forward-looking statements relating to the proposed
transactions with the Company's Area Developers are
subject to, among other things, various board, special
committee, regulatory and other approvals, and
negotiation of definitive agreements on acceptable terms.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
Einstein/Noah Bagel Corp.
(Registrant)
By: /s/ Paul A. Strasen
------------------------
Name: Paul A. Strasen
Title: Senior Vice President
Date: October 30, 1997
