SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
AVADO BRANDS, INC.
------------------------------------
(Name of Issuer)
Common Stock, par value $0.01 per share
-------------------------------------------
(Title of Class of Securities)
05336P108
-----------------------
(CUSIP Number)
Tom E. DuPree, Jr.
Avado Brands, Inc.
Hancock at Washington
Madison, GA 30650
(706) 342-4552
----------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 10, 1999
-------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f), or 13d-1(g), check the
following box [ ]
<PAGE>
SCHEDULE 13D
CUSIP No. 05336P108
1 NAMES OF REPORTING PERSONS
Tom E. DuPree, Jr.
_______________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
_______________________________________________________________________
3. SEC USE ONLY
_______________________________________________________________________
4. SOURCE OF FUNDS
Not applicable.
_______________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_______________________________________________________________________
6. CITIZENSHIP
United States of America
_______________________________________________________________________
NUMBER OF 7. SOLE VOTING POWER
SHARES
BENEFICIALLY 7,892,071
OWNED BY ____________________________________
EACH
REPORTING 8. SHARED VOTING POWER
PERSON WITH
____________________________________
9. SOLE DISPOSITIVE POWER
7,892,071
____________________________________
10. SHARED DISPOSITIVE POWER
_______________________________________________________________________
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,892,071
_______________________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES [ ]
_______________________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
31.1%
_______________________________________________________________________
14. TYPE OF REPORTING PERSON
IN
Page 2
<PAGE>
SCHEDULE 13D
CUSIP No. 05336P108
1 NAMES OF REPORTING PERSONS
Erich J. Booth
_______________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
_______________________________________________________________________
3. SEC USE ONLY
_______________________________________________________________________
4. SOURCE OF FUNDS
Not applicable.
_______________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_______________________________________________________________________
6. CITIZENSHIP
United States of America
_______________________________________________________________________
NUMBER OF 7. SOLE VOTING POWER
SHARES
BENEFICIALLY 67,200
OWNED BY ____________________________________
EACH
REPORTING 8. SHARED VOTING POWER
PERSON WITH
____________________________________
9. SOLE DISPOSITIVE POWER
67,200
____________________________________
10. SHARED DISPOSITIVE POWER
_______________________________________________________________________
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
67,200
_______________________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES [ ]
_______________________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3%
_______________________________________________________________________
14. TYPE OF REPORTING PERSON
IN
Page 3
<PAGE>
SCHEDULE 13D
CUSIP No. 05336P108
1 NAMES OF REPORTING PERSONS
Margaret E. Waldrep
_______________________________________________________________________
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
_______________________________________________________________________
3. SEC USE ONLY
_______________________________________________________________________
4. SOURCE OF FUNDS
Not applicable.
_______________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
_______________________________________________________________________
6. CITIZENSHIP
United States of America
_______________________________________________________________________
NUMBER OF 7. SOLE VOTING POWER
SHARES
BENEFICIALLY 46,413
OWNED BY ____________________________________
EACH
REPORTING 8. SHARED VOTING POWER
PERSON WITH
____________________________________
9. SOLE DISPOSITIVE POWER
46,413
____________________________________
10. SHARED DISPOSITIVE POWER
_______________________________________________________________________
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
46,413
_______________________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES [ ]
_______________________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2%
_______________________________________________________________________
14. TYPE OF REPORTING PERSON
IN
Page 4
<PAGE>
Item 1. Security and Issuer.
This statement relates to the Common Stock, par value $0.01 per share (the
"Common Stock"), of Avado Brands, Inc. ("Avado"), with principal executive
offices located at Hancock at Washington, Madison, GA 30650.
Item 2. Identity and Background.
This statement is filed by a group consisting of Tom E. DuPree, Jr.,
Chairman and Chief Executive Officer of Avado, Erich J. Booth, Chief Financial
Officer & Corporate Treasurer of Avado, and Margaret E. Waldrep, Chief
Administrative Officer of Avado (each, a "Reporting Person") (collectively, the
"Reporting Persons"). The principal business of Avado and its subsidiaries is
the ownership and operation of restaurants. The business address of Avado and
the Reporting Persons is Hancock at Washington, Madison, GA 30650. The group has
not been organized as a business organization under the laws of any state and
has no legal name.
During the last five years, no Reporting Person has been convicted in any
criminal proceeding (excluding any traffic violations or similar misdemeanors)
or been party to any civil proceeding as a result of which such person was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Each of the Reporting Persons is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
No Reporting Person acquired Common Stock other than by purchase. The
source and amount of funds used by the Reporting Persons to make prior
acquisitions of Common Stock is not material to the consummation of the
transactions proposed by the Reporting Persons. No additional acquisitions of
Common Stock by the Reporting Persons are required to effect the proposed
transactions, and no additional acquisitions of Common Stock by the Reporting
Persons are planned. The Reporting Persons have proposed to the Board of
Directors that all Common Stock (except treasury stock) held by persons other
than the Reporting Persons ("Non-Reporting Persons") be redeemed by Avado for
cash, that Avado merge with a corporation to be formed for purposes of the
merger and owned solely by the Reporting Persons ("Newco"), with Avado being the
surviving entity, and that the Reporting Persons become the sole shareholders of
Avado upon the consummation of such transactions (the "Transactions").
Page 5
<PAGE>
In agreeing to issue its publicly held debt securities, including term
trust preferred securities (collectively, the "Public Debt"), Avado became
subject to various covenants applicable to transactions including, but not
limited to, a change in control or merger. The Reporting Persons propose that
the Public Debt be redeemed in accordance with such covenants or, if any such
securities are not redeemed, that any consents required to effect the proposed
transactions be obtained on satisfactory terms from the holders of such
securities that are not redeemed.
The Reporting Persons further propose that any redemption of Public Debt
and the redemption of Common Stock held by Non-Reporting Persons be financed by
Avado from various sources of funds, including without limitation, sale of one
or two restaurant divisions to the respective management thereof, cash sales and
leasebacks of certain real estate owned by Avado, additional borrowings by Avado
from banks or other lenders, issuances of private or public debt or equity
securities and cash sales of other selected assets. The Reporting Persons have
engaged Wachovia Securities, Inc. ("Wachovia") as exclusive financial advisor
and placement agent in connection with the Transactions. Wachovia has provided a
letter to the Reporting Persons stating that, based on the information provided
to it and current market conditions, it is highly confident that the
Transactions are financeable.
Item 4. Purpose of the Transaction.
The Reporting Persons formed the group for the purpose of proposing and
consummating the Transactions referred to in Item 3 above, the description of
which is hereby incorporated into this Item 4 by reference. The plans and
proposals of the Reporting Persons include various additional transactions
designed to finance, facilitate, and effect the redemption of the Common Stock
held by Non-Reporting Persons and the merger of Avado with Newco.
The Board of Directors has four members, following the retirement of Thomas
R. Williams, effective November 2, 1999. The Board of Directors of Avado would
be changed to three members (the Reporting Persons) after the proposed
transactions are consummated. Two of the Reporting Persons, Tom E. DuPree, Jr.
and Erich J. Booth, are currently directors of Avado.
The consummation of the proposed transactions is subject to the negotiation
and execution of a merger agreement between and among Avado and Newco, the
approval of the Special Committee of the Board of Directors, the Board of
Directors and the shareholders of Avado, certain other conditions imposed by the
Reporting Persons, as well as other customary conditions in a transaction of
this nature, including receipt of all necessary regulatory approvals.
Page 7
<PAGE>
The Reporting Persons anticipate that upon completion of the acquisition,
the registration of the Common Stock will be terminated, Avado will no longer be
a publicly traded reporting company under the Securities Exchange Act of 1934,
as amended, and the Common Stock will no longer be listed on the Nasdaq National
Market.
The Reporting Persons reserve the right to withdraw their proposals, in
their discretion, at any time.
Except as described above, and except for the expectations that certain of
the Reporting Persons may from time to time sell the Common Stock (pursuant to
margin calls or otherwise), purchase shares of the Common Stock under employee
benefit plans and the exercise of stock options granted to the Reporting Persons
(depending upon market conditions, need for funds, and other factors personal to
each Reporting Person), none of the Reporting Persons has any present plans or
proposals with respect to Avado that relate to or could result in the occurrence
of any of the following events:
(a) The acquisition by any person of additional securities of Avado, or the
disposition of securities of Avado;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving Avado or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of Avado or any of
its subsidiaries;
(d) Any change in the present board of directors or management of Avado,
including any plans or proposals to change the number or term of directors to
fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend policy of
Avado;
(f) Any other material change in Avado's business or corporate structure;
(g) Changes in Avado's charter, bylaws or instruments corresponding thereto
or other actions which may impede the acquisition of control of Avado by any
person;
Page 8
<PAGE>
(h) Causing a class of securities of Avado to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association;
(i) A class of equity securities of Avado becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the Act; or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) Aggregate number of shares and percentage of outstanding Common Stock
beneficially owned by each person named in Item 2 and by the group.
Reporting Person Number of Shares Percentage of Class
- --------------------------------------------------------------------------------
Tom E. DuPree, Jr. 7,892,071 31.1%
Erich J. Booth 67,200 0.3%
Margaret E. Waldrep 46,413 0.2%
- --------------------------------------------------------------------------------
Total for Group 8,005,684 31.6%
(b) Each of the Reporting Persons has the sole power to vote and dispose of
all of the shares of Common Stock beneficially owned by such person as set forth
in Item 5(a).
(c) No Reporting Person has acquired, disposed of, or engaged in any other
transaction with respect to the Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Page 9
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
The Reporting Persons hold Common Stock in individual margin accounts.
These accounts are subject to standard margin call provisions which may require
one or more of the Reporting Persons to deposit additional funds or securities
in his or her account or to sell a portion of such Common Stock because of the
recent decline in the price of the Common Stock.
As the long-term component of executive compensation, Avado grants options
to purchase Common Stock in the future at the market value of the stock on the
date of grant. Option terms are for a period of ten years with 50% of the total
grant vested in the first five year period and 50% vested in the second five
year period. Each of the Reporting Persons holds options granted by Avado as
executive compensation. The numbers of shares of Common Stock underlying the
currently exercisable options (which shares have been included in shares
beneficially owned) and currently unexercisable options held by each of the
Reporting Persons are set forth below.
Shares Underlying Share Underlying
Reporting Person Exercisable Options Unexercisable Options
- --------------------------------------------------------------------------------
Tom E. DuPree, Jr. 23,152 982,158
Erich J. Booth 8,565 188,882
Margaret E. Waldrep 7,633 174,815
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Agreement by and among Reporting Persons to file Schedule 13D
jointly on behalf of each of them.
Exhibit 2: Proposal made by the Reporting Persons to the Board of Directors
of Avado.
Page 10
<PAGE>
Signatures
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: November 10, 1999
By: /s/ Tom E. DuPree, Jr.
-------------------------
Tom E. DuPree, Jr.
By: /s/ Erich J. Booth
------------------------
Erich J. Booth
By: /s/ Margaret E. Waldrep
------------------------
Margaret E. Waldrep
Page 11
EXHIBIT 1
JOINT FILING AGREEMENT PURSUANT TO RULE 13d-1(k)
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on behalf
of each of the undersigned without the necessity of filing additional joint
filing agreements. The undersigned acknowledge that each shall be responsible
for the timely filing of such amendments, and for the completeness and accuracy
of the information concerning him or her contained therein, but shall not be
responsible for the completeness and accuracy of the information concerning the
others, except to the extent he or she knows or has reason to believe that such
information is inaccurate. This Joint Filing Agreement may be executed in any
number of counterparts and all of such counterparts taken together shall
constitute one and the same instrument.
Dated: November 10, 1999
By: /s/ Tom E. DuPree, Jr.
------------------------
Tom E. DuPree, Jr.
By: /s/ Erich J. Booth
------------------------
Erich J. Booth
By: /s/ Margaret E. Waldrep
------------------------
Margaret E. Waldrep
Tom E. DuPree, Jr.
November 10, 1999
Board of Directors
Avado Brands, Inc.
Hancock at Washington
Madison, GA 30650
Dear Board Members,
Pursuant to that resolution dated October 21, 1999 granting permission to
me and other individuals to explore the making of a proposal to acquire Avado
Brands (the "Company"), I am pleased, on behalf of the individuals set forth on
Attachment A (the "Management Group"), to make this proposal (the "Acquisition")
whereby the Management Group and its affiliates will acquire all of the
outstanding shares of Common Stock of the Company. Each holder of Common Stock
of the Company other than members of the Management Group (who will reinvest
their Common Shares in the approximate amounts detailed in Attachment A) and
certain other shareholders who may join with the Management Group would receive
$7.25 in cash for each share of Common Stock. This would constitute a purchase
price of approximately $151 million for those shares not held and not reinvested
in the successor company by the Management Group.
Our proposal represents a 76% premium to the closing price of the Company's
shares on November 9, 1999.
The Board of Directors has created a special committee of independent
directors (the "Special Committee") to review this proposal. We are prepared to
provide pro forma historical and projected financial information relating to the
proposed Acquisition to the Special Committee and its advisors. Assuming that
after its initial review, the Special Committee wishes to entertain this
proposal, we will forward a form of acquisition agreement setting forth the
proposed terms and conditions of the Acquisition.
We have studied in detail various financing alternatives and believe that
we have several options, including but not limited to the following:
- Finance through a sale and leaseback transaction for real and personal
property, for which we have received a letter from a large southeastern
commercial bank indicating a value between $225 to $250 million. Interest in
this transaction is based on the feedback from a sample of potential lessors and
lenders provided with real estate and pro forma financial information from the
Management Group. The bank has gained much experience in the past five years
through the implementation of more than $5.0 billion in lease transactions on
more than 1,200 sites, including restaurants and retailing establishments.
- Sell one or two of the brands, for which we have received letters from
reliable investment banking, commercial banking and private equity firms that
have indicated the viability of such transactions. One such firm believes that a
transaction could be structured so that Avado Brands' shareholders are assured
of an acceptable value for the sale of the brand. It also believes that the
particular management will be highly credible with the equity investors that
would form the base of the proposed transaction.
- Sell other miscellaneous assets.
- Raise a combination of senior debt, subordinated debt and private equity
capital, for which we have engaged Wachovia Securities, Inc. ("WSI"). In
conjunction therewith, WSI has issued a "highly confident" letter to the
management group regarding their professional opinion as to the ability to
finance this proposed transaction.
Based upon the significant due diligence performed by these very credible
sources, the Management Group believes that an acceptable combination of
financing from these alternatives can be made available to us to accomplish the
Acquisition.
Our proposal is conditioned upon the execution of a definitive acquisition
agreement based on the price set forth above and such other mutually agreeable
terms and conditions as are customary in agreements of this sort, including but
not limited to customary representations, warranties, covenants and conditions.
It is also subject to, among other things, (i) the approval of the transaction
by the Special Committee, Board of Directors, shareholders, and holders of debt,
as applicable; (ii) receipt of satisfactory financing for the Acquisition; and
(iii) receipt of a fairness opinion from the financial advisor to the Special
Committee that indicates the proposed transaction is fair from a financial point
of view to the shareholders other than the Management Group.
<PAGE>
We are eager to proceed with the Acquisition as soon as possible. We
reserve the right to modify or withdraw this proposal at any time prior to the
execution and delivery of a definitive acquisition agreement if we become aware
of any facts or circumstances that we determine, in our sole discretion, makes
such action appropriate. We will not have any obligation to the Company or any
shareholder with respect to this proposal prior to the execution of the
definitive acquisition agreement.
Our advisors and we are prepared to meet with the Special Committee and its
advisors promptly to answer any questions that may arise regarding our proposal
and the proposed Acquisition.
Very truly yours,
/s/ Tom E. DuPree, Jr.
- ----------------------
Tom E. DuPree, Jr.
<PAGE>
Attachment A
-------------------
Management Group
Avado Brands, Inc.
Name Title Shares
- --------------- ---------------------------------------- -------------------
Tom DuPree Chairman and Chief Executive Officer 4,397,520
Erich Booth Chief Financial Officer 50,070
Beth Waldrep Chief Administrative Officer 38,780
- --------------- --------------------------------------- -------------------
Total 4,486,370
===================
