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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) September 9, 1997
Ground Round Restaurants, Inc.
(Exact name of registrant as specified in its charter)
New York 1-6192 13-5637682
State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
35 Braintree Hill Office Park, Braintree, Massachusetts 02184-9078
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (617) 380-3100
Not Applicable
(Former name or former address, if changed since last report.)
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Item 5. Other Events
Ground Round Restaurants, Inc. (the "Company") entered into a
Commitment Letter (the "Commitment Letter") dated September 9, 1997 with CNL
Fund Advisors, Inc. ("CNL") which has agreed to purchase, subject to certain
conditions, a minimum of fifteen (15) and a maximum of twenty (20) restaurants
owned in fee by the Company, for a purchase price not to exceed $20 million,
plus certain approved transactional costs, which restaurants are to be leased
and operated by the Company (the "Sale and Leaseback Transaction").
The Commitment Letter further provides that up to $2 million of such
purchase price, plus certain approved costs, shall be paid at closing to occur
when and if renovations and repairs of the restaurants located in Coon Rapids,
Minnesota and Bridgeton, Missouri, have been completed, provided that such
closing occurs on or before September 4, 1998. In the event that a minimum of
fifteen (15) properties having an agreed purchase price of at least $15 million
do not meet the requirements of CNL, as set forth in the Commitment Letter, then
the Commitment Letter may be terminated by either party; however, in such event,
the Company is obligated to reimburse CNL for the reasonable costs incurred by
CNL and its representatives, including attorneys fees in connection with CNL
entering into the Commitment Letter and conducting its due diligence review. The
Sale and Leaseback Transaction is scheduled to close on September 30, 1997,
subject to satisfaction of certain conditions including, among others,
satisfactory completion of due diligence investigations by CNL, approval by the
Company's commercial lenders, and the Company entering into lease agreements
that are reasonably satisfactory to the parties.
Pursuant to the Commitment Letter, the lease agreements to be
entered into by the Company and CNL shall include the following material
provisions: (i) an initial term of 20 years, with five successive five year
renewal options; (ii) the initial annual minimum rent under the lease shall be
equal to 10.25% multiplied by the purchase price (as determined by appraisal
values of each property); (iii) additional rent based upon a percentage of gross
sales for each store exceeding an agreed base sales level for such store; (iv)
the leases are assignable to certain national retail or restaurant operators;
(v) cross default provisions in the event of uncured monetary defaults; (vi) a
right of first refusal for the Company to purchase a property offered for sale
by CNL; and (vii) an option by the Company to purchase a property after seven
(7) years, at a formula price which is not less than the fair market value of
such property.
Virtually all of the proceeds from the Sale and Leaseback
Transaction will be used to repay a portion of the term loan in connection with
the Company's credit facility. There can be no assurance that the Sale and
Leaseback Transaction will be entered into or consummated on or before
September 30, 1997, or at all.
The description of the Commitment Letter is qualified in its
entirety by the terms and conditions contained in such agreement.
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Item 7. Financial Statements and Exhibits:
(a) Financial Statement of businesses acquired.
Not applicable.
(b) Pro Forma financial information.
Not applicable.
(c) Exhibits:
99.1 Press Release dated September 10, 1997.
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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.
GROUND ROUND RESTAURANTS, INC.
By:/s/ Stephen J. Kiel
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Name: Stephen J. Kiel
Title: Senior Vice-President and Chief
Financial Officer
Date: September 18, 1997
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EXHIBIT INDEX
99.1 Press Release dated September 10, 1997.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: Stephen Kiel
Ground Round
617-380-3115
GROUND ROUND RESTAURANTS SIGNS COMMITMENT LETTER
FOR SALE-LEASEBACK OF 20 SITES
BRAINTREE, Mass., September 10, 1997 - Ground Round Restaurants,
Inc. (Nasdaq: GRXR) announced today that the Company has entered into a
commitment letter on Sept. 9 1997, with CNL Fund Advisors, Inc., to sell and
leaseback between 15 and 20 restaurants to CNL Group, Inc. and its affiliates
for between $15 and $20 million in cash. Proceeds will be used to reduce bank
debt by approximately 40 percent as well as for general corporate purposes.
Closing is scheduled for Sept. 30, 1997, subject to satisfaction of certain
conditions, including satisfactory completion of certain due diligence review by
CNL, and approval by the Company's commercial lenders. There can be no assurance
that the transaction will close or not be delayed.
On Sept. 2, 1997, the Company announced that it had entered into a
Merger Agreement with GRR Merger Corp., a company formed by Boston Ventures
Management, Inc., pursuant to which GRR Merger Corp. initiated a tender offer
for all of the Company's outstanding shares of common stock on Sept. 8, 1997.
"Completion of the sale and leaseback transaction will satisfy one
of the conditions required by the Company's lenders under the Letter of Intent
dated August 29, 1997, to amend and extend the Company's existing credit
agreement," stated Stephen Kiel, the Company's chief financial officer. "Other
conditions include consummation of the GRR tender offer and receipt
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by the Company of an equity infusion of not less than $7.5 million for working
capital purposes following the merger."
Ground Round Restaurants, Inc. operates 121 company and franchises
41 family- oriented, full-service, casual dining restaurants in the Northeast,
Mid-Atlantic and Midwest regions of the United States.
September 10, 1997
