FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 12, 1994
KASH N' KARRY FOOD STORES, INC.
(Exact name of registrant as specified in charter)
Commission File No. 33-25621
Delaware 95-4161591
(State of incorporation) (IRS employer identification number)
6422 Harney Road, Tampa, Florida 33610
(Address of registrant's principal executive offices)
(813) 621-0200
(Registrant's telephone number, including area code)
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On May 11, 1994, Kash n' Karry Food Stores, Inc. (the
"Company") executed an engagement letter with Donaldson, Lufkin
& Jenrette Securities Corporation ("DLJ") pursuant to which DLJ
will act as financial advisor to the Company in connection with
a proposed capital restructuring. On May 12, 1994,
representatives of the Company and DLJ met with certain holders
of the Company's outstanding Senior Floating Rate Notes due
1996, 12 3/8% Senior Notes due 1999 and 14% Subordinated
Debentures due 2001 to discuss the Company's current financial
condition and recent operating trends.
The Company reported that its previously announced
engagement of Morgan Stanley & Co. Incorporated to assist in
its capital raising efforts had not proceeded to a satisfactory
conclusion and that it had been unable to refinance the
approximately $30 million of new store costs advanced through
its revolving credit facility. As previously reported, the
Company has not commenced any further new store construction.
The Company estimates that its fiscal year 1994 capital
expenditures will total $15 million as compared to $37.7
million during fiscal year 1993. The Company expects that, for
the third quarter ended May 1, 1994, it will report sales of
approximately $279.8 million and operating cash flow (earnings
before interest, taxes, depreciation and amortization and store
closing and other costs) of approximately $14.3 million, as
compared to sales of $287.0 million and operating cash flow of
$17.7 million for the comparable period during fiscal 1993.
For the full fiscal year ending July 31, 1994, the Company
estimates that it will report revenues of approximately $1.07
billion and operating cash flow of approximately $42.4 million,
as compared to sales of $1.09 billion and operating cash flow
of $54.8 million reported for fiscal 1993. The Company
attributed the actual and anticipated decline in sales to the
closing of 17 stores over the past 12 months; third quarter
sales on a comparable store basis increased approximately 1.5%.
The Company attributed much of the actual and anticipated
unfavorable operating cash flow variance to its foregoing
favorable inventory acquisition opportunities due to its
reduced working capital availability. While the Company
believes the reported estimates are reasonable, all projections
are subject to a number of uncertainties. The Company does not
intend to furnish updated estimates.
In light of the foregoing, the Company proposed a
restructuring of the capital structure of the Company pursuant
to which the maturity of the Senior Floating Rate Notes would
be extended from 1996 to 2004; the maturity of the Senior Notes
would be extended from 1999 to 2004 and the interest rate would
be reduced from 12 3/8% to 9%; and the Company's outstanding
indebtedness represented by the Subordinated Debentures would
be exchanged for approximately 84.6% of the outstanding common
stock of the Company. The holders of the existing preferred
and common stock of the Company, in exchange for their
interests, will receive a warrant to acquire an aggregate of 5%
of the common stock of the Company under certain circumstances.
One existing holder, Green Equity Investors, L.P., would invest
an additional $10 million in cash in exchange for approximately
15.4% of the outstanding common stock of the Company. Other
existing obligations of the Company, including trade debt,
mortgage debt and capitalized lease obligations, would be
unaffected.
There can be no assurance that the proposal as presented
will be agreed to by the Company's creditors.
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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.
KASH N' KARRY FOOD STORES, INC.
Date: May 12, 1994 /s/ Richard D. Coleman
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Richard D. Coleman
Vice President, Controller
and Secretary
