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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 5)
RALLY'S HAMBURGERS, INC.
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(Name of Issuer)
Common Stock, par value $.10 per share
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Title of Class of Securities
751203-10-0
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(CUSIP Number)
Andrew F. Puzder
Executive Vice President and General Counsel
CKE Restaurants, Inc.
1200 North Harbor Boulevard
Anaheim, California 92801
Tel. (714) 774-5796
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
SEPTEMBER 21, 1997
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(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 which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(3) or (4), check the following box
[ ].
Check the following box if a fee is being paid with the statement [ ].
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SCHEDULE 13D/A
CUSIP NO.: 374503 1 10 0
(1) NAME OF REPORTING PERSON:
CKE Restaurants, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
IRS No. 33-0602639
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
(3) SEC USE ONLY
(4) SOURCE OF FUNDS: WC
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
(6) CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
(7) SOLE VOTING POWER: 4,528,015 (1) (2)
(8) SHARED VOTING POWER: 0
(9) SOLE DISPOSITIVE POWER: 4,528,015 (1) (2)
(10) SHARED DISPOSITIVE POWER: 0
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 4,528,015 (1) (2)
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES: [X]
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 22% (3)
(14) TYPE OF REPORTING PERSON: CO
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(1) Mr. William P. Foley, II, is Chairman of the Board and Chief Executive
Officer of CKE Restaurants, Inc. ("CKE"). A limited partner whose
general partner is controlled by Mr. Foley owns 15.8% of the
outstanding Common Stock of CKE, and Fidelity owns 2.2% of the
outstanding Common Stock of CKE. By virtue of such stock ownership and
positions, Mr. Foley may be deemed a "controlling person" of CKE. Mr.
Foley disclaims beneficial ownership of any of the shares of Common
Stock held by CKE.
(2) Includes shares of Common Stock issuable upon exercise of 775,488
warrants. Does not include warrants to purchase 750,000 shares of
Common Stock at an exercise price of $4.375 which vest on December 20,
1997. See Item 5 of this Amendment to Schedule 13D.
(3) Based upon 20,567,547 shares of Common Stock outstanding as of August
1, 1997
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ITEM 1. SECURITY AND ISSUER.
This Amendment Number 5 amends the statement on Schedule 13D filed with
the Securities and Exchange Commission on March 21, 1997, as heretofore amended
(the "Schedule 13D/A") with respect to the Common Stock, par value $0.10 per
share (the "Common Stock") of Rally's Hamburgers, Inc., a Delaware corporation
(the "Company"), with its principal executive offices located at 10002
Shelbyville Road, Suite 150, Louisville, Kentucky 40223.
Other than as set forth herein, there has been no material change in the
information set forth in the Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 of the Schedule 13D is hereby amended to add a paragraph as
follows:
On September 21, 1997, CKE Restaurants, Inc. ("CKE"), Fidelity National
Financial, Inc. ("Fidelity"), GIANT and Rally's entered into a nonbinding letter
of intent (the "Letter of Intent"), a copy of which is attached hereto as
Exhibit 99.02 and incorporated herein by reference. Pursuant to the Letter of
Intent, Rally's would acquire all of the shares of the common stock of Checker's
Drive-In Restaurants, Inc., a Delaware corporation ("Checkers") held by CKE,
Fidelity and GIANT (as well as certain of GIANT's affiliates and related
parties) in exchange for shares of Rally's common stock and a new series of
Rally's preferred stock. On September 22, 1997 Rally's issued a press release
regarding the Letter of Intent and the transactions contemplated thereby, a copy
of which is attached hereto as Exhibit 99.03 and incorporated herein by
reference. After consummation of the acquisition, it is anticipated that certain
administrative and operational functions may be combined.
Except as set forth herein, CKE has no current plans or proposals of
the type set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
See Item 4 to this Amendment, which is incorporated herein by this
reference.
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SIGNATURE
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.
October 1, 1997 CKE RESTAURANTS, INC.
By: /s/ CARL A. STRUNK
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Carl A. Strunk
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
99.02 Letter of Intent, dated September 21, 1997, from Rally's Hamburgers,
Inc., to CKE Restaurants, Inc., Fidelity National Financial, Inc., and
GIANT GROUP, LTD.
99.03 Press release, dated September 22, 1997, issued by Rally's Hamburgers,
Inc.
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EXHIBIT 99.02
Letter of Intent, dated September 21, 1997, from Rally's Hamburgers, Inc., to
CKE Restaurants, Inc., Fidelity National Financial, Inc., and GIANT GROUP, LTD.
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EXHIBIT 99.02
RALLY'S HAMBURGERS, INC.
10002 Shelbyville Road, Suite 150
Louisville, Kentucky 40223
September 21, 1997
CKE Restaurants, Inc.
1200 North Harbor Boulevard
Anaheim, CA 92801
Fidelity National Financial, Inc.
17911 Von Karman Avenue, Suite 300
Irvine, CA 92614
GIANT GROUP, LTD.
9000 Sunset Boulevard, 16th Floor
Los Angeles, CA 90069
Gentlemen:
This letter of intent is in connection with a proposed exchange (the
"Transaction") of shares of Rally's Hamburgers, Inc. ("Rally's") common stock,
$.10 par value per share (the "Rally's Common Stock"), and a new series of
preferred stock (the "Rally's Preferred Stock") for shares of Checkers Drive-In
Restaurants, Inc. common stock, $.001 par value per share (the "Checkers Common
Stock"), held by you and certain other persons. In that regard, and with a view
toward our reaching an agreement on a definitive contract and related documents
(collectively, the "Exchange Agreement"), Rally's proposes that this letter
serve as a memorandum of our mutual intentions with respect to the business
points of the proposed Transaction subject to the terms and conditions set forth
in this correspondence.
1. EXCHANGE. Rally's proposes to acquire all of Checkers Common Stock held
of record on September 19, 1997 by Fidelity National Financial, Inc.
("FNF") and CKE Restaurants, Inc. ("CKE"). In addition, pursuant to the
Exchange Agreement, Rally's proposes to acquire all shares of Checkers
Common Stock held by GIANT GROUP, LTD. and certain of its affiliates and
related parties (the"GIANT Parties") on September 19, 1997 and may
acquire from one or more other persons certain of the shares of Checkers
Common Stock such persons purchased in a private placement in February
1997.
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2. EXCHANGE CONSIDERATION. Rally's will issue shares of Rally's Common
Stock and Rally's Preferred Stock (with substantially the terms set
forth in Appendix A hereto) as consideration for the Checkers Common
Stock to be acquired in the Transaction. The number of shares of Rally's
Common Stock and Rally's Preferred Stock to be so issued will be based
upon the current market value of the Rally's Common Stock and the
Checkers Common Stock. It is the intent of the parties that such market
values will be the average closing sale price on the NASDAQ National
Market for the five trading days immediately preceding the initial
public announcement of the Transaction ($3.11 for the Rally's Common
Stock and $1.33 for the Checkers Common Stock). Rally's will issue pro
rata shares of Rally's Common Stock constituting 19% of the outstanding
Rally's Common Stock, with the remainder of the consideration being in
the form of Rally's Preferred Stock.
3. THE CLOSING. The closing ("Closing") of the Transaction shall occur as
soon as practical following the completion of the following:
(a) Rally's obtaining a written opinion from an investment
banking firm acceptable to the Independent Committee appointed
by Rally's Board of Directors for purposes of the Transaction
("Rally's Independent Committee") as to the fairness of the
Transaction, from a financial point of view, to Rally's and its
stockholders;
(b) Rally's Independent Committee approving the Transaction and
authorizing execution of the Exchange Agreement;
(c) The execution of the Exchange Agreement by Rally's, FNF, CKE
and the GIANT Parties; and
(d) Each party obtaining all required corporate, governmental,
regulatory and other third party approvals and completing all
required governmental and regulatory filings.
In no event shall the Closing date be extended beyond April 1, 1998,
absent an express written agreement between the parties extending the
Closing Date.
4. REGISTRATION OF RALLY'S COMMON STOCK. Rally's will file a Registration
Statement with the Securities and Exchange Commission with respect to
the issuance or resale of the Common Stock issued in connection with the
Transaction (including upon conversion of the Rally's Preferred Stock).
If such Registration Statement relates to the resale of the Rally's
Common Stock, Rally's will maintain the effectiveness of such
Registration Statement for a two-year period. Rally's shall bear all
expenses in connection with the Registration Statement except for fees
and expenses of counsel for the other parties to the Exchange Agreement.
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5. UNDERTAKINGS. In consideration of the substantial time, effort and
expense Rally's will expend in connection with the preparation and
execution of the Exchange Agreement, FNF and CKE each undertakes and
agrees that, between the date of the execution of this letter and the
earlier of the execution of the Exchange Agreement or the termination of
the Transaction, each will use its commercially reasonable efforts to
cause Checkers to:
(a) do nothing to materially adversely affect the prospects or
continued viability of Checker's business;
(b) pay no extraordinary compensation to any of Checker's
officers, directors or stockholders and shall not incur any
additional debt other than in the ordinary course of business;
(c) except in order to satisfy outstanding options and/or
warrants, not issue or sell any of its securities or any
securities of any of its subsidiaries, or any rights to acquire
such securities;
(d) not pay any dividends, redeem any securities or otherwise
cause any asset to be distributed to its stockholders in their
capacities as such;
(e) not solicit or initiate any further discussions or engage in
further negotiations or discussions with anyone concerning a
sale or transfer of all or any part of Checker's stock or
assets, and will promptly inform Rally's of any offer or
proposal, directly or indirectly, with respect to the foregoing,
and shall furnish such information with respect thereto as
Rally's may request; provided that nothing herein shall preclude
Checkers or its Board of Directors of acting in good faith to
comply with the Board's fiduciary obligations under applicable
law; and
(f) use its best efforts to preserve intact Checker's business
organization, its goodwill and its customers, suppliers, and
others having business relations with it.
6. EXPENSES. Subject to Section 4 above, each party to the Exchange
Agreement shall bear its respective expenses incurred in the
Transaction.
7. ANNOUNCEMENTS. Prior to execution of the definitive Exchange Agreement,
no party shall issue any statement or communication to the public
regarding the Transaction without the consent of the other parties,
which consent shall not be unreasonably withheld. Such restriction shall
be subject to the parties obligations to comply with the applicable
securities laws which will require public disclosure upon execution of
this letter on intent. The parties will cooperate with respect to the
preparation of such required disclosure.
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8. BROKERS. The agreement contemplated hereby will contain a representation
by both parties that no broker or finder was involved in the proposed
Transaction and an indemnification for any costs to the other party
caused b y a breach or an alleged breach thereof.
9. OUTLINE ONLY: NO CONTRACT. The parties do not intend this letter of
intent to be a legally binding and enforceable contract. A binding
contract will not exist unless and until the parties have executed an
Exchange Agreement approved by Rally's Board of Directors and
Independent Committee regarding the subject matter of this letter of
intent and containing all other essential terms of an agreed-upon
transaction. The parties acknowledge that they have not set forth herein
nor agreed upon all essential terms of the subject matter of the
Transaction, including without limitation, warranties and
representations, conditions precedent and indemnities, and that such
essential terms will be the subject of further negotiation. Statements
of intent or understandings in this letter shall not create any rights
or obligations for or on the part of any party to this letter.
Notwithstanding the foregoing, the parties agree that the provisions in
paragraphs 5 (Undertakings), 6 (Expenses), 7 (Announcements), 8
(Brokers), 9 (Outline Only ), 10 (Termination), 11 (Representations), 12
(Expiration of Offer), and 13 (Waiver of Torts) represent the parties'
legally binding agreements enforceable in accordance with their terms.
The enforceability of such provisions is not conditioned on further
negotiations or the successful outcome of any further negotiations.
10. TERMINATION. This letter of intent shall continue in effect so long as
Rally's is proceeding diligently toward completion of the Transaction,
provided that any party may terminate this letter of intent upon written
notice to the other party any time after November 30, 1997 if the
Exchange Agreement shall not have been executed by such date. This date
may be extended by agreement of the parties.
11. REPRESENTATIONS. By signing this letter of intent in the spaces set
forth below, all parties indicate their approval of the foregoing and
represent to the other that no consent of another party is necessary in
order to proceed to negotiate and structure a transaction along the
lines set forth below.
12. EXPIRATION OF OFFER. This letter of intent shall expire for all purposes
if it has not been accepted by FNF and CKE and returned to Rally's on or
before 9:00 a.m. EST on September 22, 1997.
13. WAIVER OF TORT CLAIM. Each party hereby waives for itself and for its
successors and assigns any claim for damages (including but not limited
to punitive damages) against the other parties, their agents and
representatives, for bad faith denial of the existence of a contract or
for breach of the implied covenant of good faith and fair dealing in
connection with the failure of the parties hereto to consummate a
transaction as outlined above.
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If the foregoing meets with your approval, kindly execute both copies of
this letter and return one copy to us immediately.
RALLY'S HAMBURGERS, INC.
By: /s/ BURT SUGARMAN
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Burt Sugarman
AGREED TO AND ACCEPTED THIS 21ST DAY OF SEPTEMBER, 1997.
CKE RESTAURANTS, INC.
By: /S/ ANDREW PUZDER
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Andrew Puzder
FIDELITY NATIONAL FINANCIAL, INC.
By: /S/ ANDREW PUZDER
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Andrew Puzder
GIANT GROUP, LTD.
By: /S/ BURT SUGARMAN
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Burt Sugarman
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APPENDIX A
RALLY'S HAMBURGERS, INC.
PROPOSED SERIES A PREFERRED STOCK
TERM SHEET
A. LIQUIDATION PREFERENCE.
$311.00 per share of Series A Preferred (100 times the market value of
the Rally's Common Stock, as determined by the Letter of Intent to which this
Appendix A is attached) upon liquidation of Rally's plus accrued unpaid
dividends (the "Liquidation Preference").
B. DIVIDENDS.
Right to receive $45.00 per annum (i.e., 14.5% of the initial
Liquidation Preference), payable nine months from the date of issuance and
quarterly thereafter in cash if, and only if, at the first action taken by
Rally's stockholders after the execution of the Exchange Agreement, such
stockholders fail to approve the conversion provisions of the Series A
Preferred and any change in the number of authorized shares of Common Stock
needed to enable Rally's to comply with the conversion provisions (the
"Stockholder Approval") or if the Series A Preferred Stock is not converted
into Common Stock on or prior to July 31, 1998. In either case, dividends shall
accrue from the Closing date.
C. VOTING RIGHTS.
None, except (i) upon default of two dividends, the Board of Directors
will be expanded by two directors and the holders of the Series A Preferred,
voting as a class, will have the right to elect two directors and (ii) as
required by the Delaware General Corporation Law.
D. CONVERSION.
If the Stockholder Approval is obtained, the Series A Preferred will be
automatically converted into Common Stock at a per share Conversion Rate equal
to the Liquidation Preference dividend by $3.11 (the per share market value
of the Rally's Common Stock used in the Exchange), subject to adjustment.
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E. MATURITY
If the Stockholder Approval is not obtained, the Series A Preferred
must be redeemed, on or prior to the second anniversary of the Closing at a
redemption price equal to the Liquidation Preference. If the Company does not
redeem the Series A Preferred as required, then: (i) the dividend which holders
Series A Preferred are entitled to receive shall increase to $55.00 per annum
(18% of the Liquidation Preference); and (ii) if such holders are not otherwise
entitled to elect two directors, the number of directors constituting the Board
of Directors shall be increased by two and such holders (voting as a separate
class) will be entitled to elect two directors.
2
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EXHIBIT 99.03
Press release, dated September 22, 1997, issued by Rally's Hamburgers, Inc.
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RALLY'S HAMBURGERS, INC.
10002 Shelbyville Road, Suite 150, Louisville, Kentucky 40223
NEWS RELEASE
CONTACT: Andrew Puzder
(805) 898-7134
FOR IMMEDIATE RELEASE
LOUISVILLE, KY--SEPTEMBER 22, 1997--RALLY'S HAMBURGERS, INC. (NASDAQ:RLLY) today
announced that it has agreed in principle to acquire, in exchange for Rally's
securities, an aggregate of approximately 14.4 million shares of the Common
Stock of Checkers Drive-In Restaurants, Inc. ("Checkers"), held of record by CKE
Restaurants, Inc. ("CKE") (NYSE:CKR) and Fidelity National Financial,
Inc.("FNF") (NYSE:FNF). In the transaction, Rally's will also acquire an
aggregate of approximately 2.4 million shares of Checkers Common Stock held by
GIANT GROUP, LTD. ("GIANT") (NYSE:GPO) and certain of its affiliates and related
parties (the "GIANT Parties"). CKE and FNF will continue to hold warrants to
purchase an aggregate of approximately 9.46 million shares of Checkers Common
Stock, and the GIANT Parties will continue to hold warrants to purchase an
aggregate of approximately 5.3 million shares of Checkers Common Stock.
Under the terms of the agreement in principle, Rally's would issue
shares of Rally's Common Stock and a new series of Rally's Preferred Stock in
exchange for the Checkers Common Stock it acquires. The number of shares of
Rally's Common Stock and Preferred Stock to be issued would be based upon the
average closing price of the Checkers Common Stock and the Rally's Common Stock
on the NASDAQ National Market for the five trading days ended on September 19,
1997. The Rally's Preferred Stock would be automatically converted into Rally's
Common Stock upon approval of such conversion by Rally's stockholders at their
next meeting.
Upon consummation of the transaction, Rally's will become Checkers'
largest stockholder with a minimum of 24% of the outstanding Checkers Common
Stock. As a result of the issuance of Rally's Common Stock in the transaction,
including upon conversion of the Rally's Preferred Stock, CKE and FNF will own
an aggregate of approximately 42% of the outstanding shares of Rally's Common
Stock. Based upon the average closing price for the Checkers Common Stock for
the five trading days ended September 19, 1997 ($1.33), Rally's equity will
increase approximately $22 million as a result of the transaction.
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Burt Sugarman, Chairman of Rally's and GIANT, stated: "We believe that
this investment by Rally's reflects the strong belief of Rally's, CKE and FNF,
as well as that of GIANT, in the potential of both Rally's and Checkers. In
addition, this transaction will provide opportunities for further cost-cutting
improvements for both Rally's and Checkers in the highly competitive fast food
market."
William P. Foley, II, Chairman of CKE, FNF and Checkers, stated: "This
transaction allows both Checkers and Rally's to take advantage of cost saving
opportunities by combining administrative and operational functions. The cost
savings should make resources available to bolster each brand's competitive
position. We believe this transaction will be very positive for the stockholders
of both companies."
The acquisition is subject to negotiation of definitive agreements,
receipt of a fairness opinion from an investment banker engaged by an
Independent Committee of the Rally's Board of Directors, whose members are
Willie D. Davis and Ronald B. Maggard, and approval of the transaction by the
Independent Committee. The transaction is also subject to any required
governmental or third party approvals.
Rally's Hamburgers, Inc., along with its franchisees, operates
approximately 473 double drive-thru hamburger restaurants primarily in the
Midwestern United States. Checkers Drive-In Restaurants, Inc., along with its
franchisees, operates approximately 480 double drive-thru hamburger restaurants
primarily located in the Southeastern United States.
