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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: JUNE 11, 1999
(Date of earliest event reported)
CALIFORNIA CULINARY ACADEMY, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 0-21932 94-3042862
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
625 POLK STREET, SAN FRANCISCO, CALIFORNIA, 94102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 771-3536
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Item 5. OTHER EVENTS.
On May 26, 1999, the Academy announced that it had received a letter
from three shareholders purporting to hold a majority of the Academy's shares
indicating that they intended to act together to elect a new board of directors.
The three shareholders also expressed opposition to a proposed $7 million
financing involving the issuance of convertible debt and warrants that is to be
voted upon at the Academy's upcoming annual meeting of shareholders. A copy of
the Academy's May 26, 1999 press release is included as an exhibit to this
report.
The purpose of the proposed financing was to fund the Academy's
strategic plan, which primarily involves the development of a new regional
campus in New Orleans, Louisiana, the opening of additional college of food
locations and the production of a new television series. The proposed financing
will not go forward if it does not receive the approval of the Academy's
shareholders at the Annual Meeting. Furthermore, the announced intention of the
shareholder group has adversely impacted the Academy's other financing plans,
negatively affecting the Academy's short term liquidity. Prior to the
announcement, the Academy had planned to effect a $10 million sale and leaseback
of the property it has acquired in New Orleans, which was expected to result in
the immediate return of the Academy's investment in the property of
approximately $1.2 million. The prospective sale and leaseback investors have
indicated their unwillingness to proceed without assurances as to the outcome of
the matters to be voted upon at the annual meeting.
The Academy has contractual obligations primarily related to
development of the new campus and the television series which call for the
Academy to make payments of more than $700,000 in the next 45 days. The
Academy's cash on hand and available credit under existing facilities are not
sufficient to meet these payment obligations. The Academy believes that it will
be able to obtain alternative financing in the short term, although there is no
assurance that such financing will be available on favorable terms or at all.
If shareholder approval is not obtained or for other reasons the
proposed financing is not closed, and if alternative financing proves to be
unavailable, it is possible that the Academy will be in default of certain of
its obligations. The Academy also would have to terminate pursuit of its other
strategic plans.
In addition, if the Academy does not receive the proceeds of the
proposed financing or a sufficient alternative financing, it may not meet the
financial responsibility requirements of the U.S. Department of Education. The
Department's regulations require an institution like the Academy to achieve a
minimum score based on ratios measuring its primary reserves, equity and net
income. These regulations also require institutions to have sufficient cash
reserves to make required refunds, to meet repayment obligations to the
Department, and not to be in violation of any loan agreement at the end of its
fiscal year. Failure to meet these requirements may subject the Academy to
additional monitoring by and reporting to the Department, procedures affecting
the disbursement of federal student financial assistance to its students, and
possibly the posting of a letter of credit in favor of the Department. If the
Academy's financial condition were to fail to improve sufficiently, its
participation in the Title IV student financial
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assistance programs could be jeopardized which would have a material adverse
effect on the Academy.
The Academy has scheduled its Annual Meeting for June 28, 1999, at 4:00
p.m., at the Academy's headquarters in San Francisco. Shareholders of record at
the close of business on May 21, 1998 are entitled to notice of and to vote at
the Annual Meeting. The matters to be voted upon at the meeting include the
election of directors, the proposed financing, an amendment to the Academy's
by-laws and ratification of auditors.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
99.1 Press Release of the Registrant dated May 26, 1999
SIGNATURE
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.
Dated: June 11, 1999.
CALIFORNIA CULINARY ACADEMY, INC.
By /s/ Charles E. White
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Charles E. White
Chief Financial Officer
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Exhibit Index
To California Culinary Academy, Inc.
Report Form 8-K dated June 11, 1999
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<CAPTION>
Sequentially
Exhibit No. Exhibit Numbered Page
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99.1 Press Release dated May 26, 1999 5
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COMPANY PRESS RELEASE
CALIFORNIA CULINARY ACADEMY INC. ANNOUNCES MAJORITY SHAREHOLDERS' INTENTION TO
CHANGE BOARD OF DIRECTORS AND SELL THE ACADEMY
SAN FRANCISCO, Calif.-- May 26, 1999--California Culinary Academy Inc.
(Nasdaq:COOK - news) announced that it has received a letter from three
shareholders purporting to hold a majority of the Academy's shares indicating
that they intend to act together to elect a new board of directors.
These shareholders have also expressed opposition to the proposed financing,
which will be voted on by shareholders at the upcoming annual meeting.
The three shareholders, Theodore G. Crocker, William G. DeMar, and Thomas C.
Green, have further indicated their desire that the Academy should seek
opportunities for a business combination transaction and that they are speaking
to potential acquirers. Crocker is the former chairman and chief executive of
the Academy and DeMar is a former director. Green is an affiliate of Thomas
Green Securities, which makes a market in the Academy's common stock.
The Academy's board of directors will give appropriate consideration to any
business combination proposal that the Academy may receive and intends to meet
with any potential acquirers who express appropriate interest. This is the
second time, however, in the past 18 months that Crocker and DeMar have sought
proposals to sell the Academy. There can be no assurance that the Academy will
receive any offer with respect to a business combination transaction or that any
offer the Academy may receive will be approved by the shareholder group and the
current board of directors.
Management continues to support its current strategic plan and related
financing. The current board of directors and management believe that the plan
offers the best prospect for shareholder value. While the board and management
will therefore make an appropriate evaluation of any business combination
opportunities that may arise, they intend to pursue the plan and seek
shareholder support for the financing. The board and management can give no
assurance that they will remain with the Academy if the majority shareholders
vote to change the Academy's current course.
The Academy had planned to hold its 1999 annual meeting of shareholders on June
11, 1999. The principal purposes of the meeting were to elect a new board of
directors and to approve a proposed financing transaction involving the issuance
of convertible debentures and warrants. The proceeds of the financing were to be
used to fund the construction and development of a new campus in New Orleans.
The meeting will be rescheduled, and a new date has not been announced. The
shareholder group has requested a special meeting of shareholders to vote upon
the matters that will be the subject of the annual meeting.
Currently operating out of its core campus in San Francisco and two College of
Food campuses in Salinas, and San Diego, Calif., the California Culinary Academy
is one of the largest culinary schools in the United States and an
internationally-known leader and innovator in
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culinary arts education. The Academy offers two fully accredited professional
programs as well as programs in continuing education, and vocational and
consumer training. The Academy also provides contract training and consulting
services for product development and operations in the public and private
sectors. Information on the Academy can be found on the Internet at
http://www.baychef.com.
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CONTACT: California Culinary Academy Inc., San Francisco
Chuck White, 415/292-8258
or
Richmont Consulting International, Los Angeles
Edda Brown or Bret Hughes, 323/658-8088
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