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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: December 12, 1997
GB FOODS CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 1-10576 33-0403086
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
1200 North Harbor Blvd., Anaheim, California 92803
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(Address of principal executive offices)
(714) 491-6400
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(Registrant's telephone number, including area code)
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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.
GB FOODS CORPORATION
/s/ ANDREW F. PUZDER
Dated: December 12, 1997 -----------------------------
Andrew F. Puzder
Chief Executive Officer
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Item 5. Other Events
On December 12, 1997, GB Foods Corporation ("GBFC", Nasdaq:GBFC),
operator of the Green Burrito Mexican quick service restaurants announced the
signing of a letter of intent whereby GBFC plans to acquire 100% of the issued
and outstanding capital stock of TBRL.
Under the terms of the Letter of Intent, each share of TBRL stock will
be converted into the right to receive .8276 shares of GBFC common stock
together with cash in lieu of any fractional shares, which equates to $9.00 per
share for TBRL's stock based upon an average closing price of $10.875 for
GBFC's stock. GBFC and TBRL have collared the exchange ratio between $12.875 and
$8.875 per share of GBFC stock. The adjustment factor is designed to insure that
the market value of the shares of GBFC to be issued to TBRL's shareholders is
not less than $7.34 nor more than $10.66 per share of TBRL common stock. The
market value is to be determined based on the average closing price of GBFC
common stock during the ten day trading period ending on the second business day
prior to the Closing. Below $8.875, GBFC may make up the difference in
additional shares at its option and above $12.875 per share TBRL shareholders
would have the exchange ratio reduced pro rata.
"Safe Harbor" Statements under the Private Securities Litigation Reform
Act of 1995: Statements which are not historical facts contained in this release
are forward looking statements that involve risks and uncertainties, and results
could vary materially from the description contained herein and other risks as
may be detailed in the Company's Securities and Exchange Commission filings.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release - GB Foods Corporation and Timber Lodge
Steakhouse, Inc. Announce the Execution of a Letter of Intent
whereby GB Foods will acquire all of the Outstanding Capital Stock
of Timber Lodge Steakhouse, Inc.
99.2 Letter of Intent dated December 11, 1997.
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EXHIBIT 99.1
GB FOODS CORPORATION
Press Release
Contacts: Andrew F. Puzder FOR IMMEDIATE RELEASE
CEO for GB Foods Corporation
(805) 898-7134
Dermot F. Rowland
CEO of Timber Lodge Steakhouse, Inc. NASDAQ Symbol: GBFC
(612) 929-9353
GB FOODS CORPORATION AND TIMBER LODGE STEAKHOUSE, INC.
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ANNOUNCE THE EXECUTION OF A LETTER OF INTENT WHEREBY GB FOODS
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WILL ACQUIRE ALL OF THE OUTSTANDING CAPITAL STOCK
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OF TIMBER LODGE STEAKHOUSE, INC.
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Irvine, Calif., December 12, 1997 - GB Foods Corporation ("GBFC"),
operator of the Green Burrito Mexican quick-service restaurants (NASDAQ:GBFC),
and Timber Lodge Steakhouse, Inc. ("TBRL"), operator of the Timber Lodge
Steakhouse family-style restaurants (NASDAQ:TBRL), announced that they have
entered into a Letter of Intent, pursuant to which GBFC has proposed to acquire
one hundred percent of the issued and outstanding capital stock of TBRL (the
"Proposed Transaction").
Under the terms of the Letter of Intent, each share of TBRL stock will
be converted into the right to receive .8276 shares of GBFC common stock
together with cash in lieu of any fractional shares, which equates to $9.00 per
share for TBRL's stock based upon an average closing price of $10.875 for GBFC's
stock. GBFC and TBRL have collared the exchange ratio between $12.875 and $8.875
per share of GBFC stock. The adjustment factor is designed to insure that the
market
-more-
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GB FOODS CORPORATION AND TIMBER LODGE STEAKHOUSE, INC. ANNOUNCE THE EXECUTION OF
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A LETTER OF INTENT WHEREBY GB FOODS WILL ACQUIRE ALL OF THE OUTSTANDING CAPITAL
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STOCK OF TIMBER LODGE STEAKHOUSE, INC.
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value of the shares of GBFC to be issued to TBRL's shareholders is not less than
$7.34 nor more than $10.66 per share of TBRL common stock. The market value is
to be determined based on the average closing price of GBFC common stock during
the ten day trading period ending on the second business day prior to the
Closing. Below $8.875, GBFC may make up the difference in additional shares at
its option and above $12.875 per share TBRL shareholders would have the exchange
ratio reduced pro rata.
The Proposed Transaction is subject to certain conditions, including
(i) each party's due diligence investigation; (ii) Fairness Opinions; (iii) the
execution of definitive acquisition agreements; (iv) approvals from the
respective Boards of Directors and shareholders of GBFC and TBRL; (v) the
parties obtaining all regulatory approvals; and, (vi) the purchase by TBRL from
CKE Restaurants, Inc. (NYSE:CKR) or its affiliate of between twelve (12) and
twenty (20) JB's Restaurants for conversion to Timber Lodge Steakhouse
restaurants. It is the intention of GBFC and TBRL that the Proposed Transaction
be accounted for as a pooling of interests.
TBRL, located in St. Louis Park, Minnesota, owns and operates sixteen
(16) casual dining steakhouse restaurants in Minnesota, Wisconsin, Illinois,
Western New York and South Dakota, including eight (8) in the greater
Minneapolis/St. Paul metropolitan area. The Timber Lodge Steakhouse restaurants
specialize in providing high quality USDA choice steak dinners at outstanding
values and with uncompromising service. Its menu also includes Atlantic salmon,
baby-back ribs,
-more-
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GB FOODS CORPORATION AND TIMBER LODGE STEAKHOUSE, INC. ANNOUNCE THE EXECUTION OF
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A LETTER OF INTENT WHEREBY GB FOODS WILL ACQUIRE ALL OF THE OUTSTANDING CAPITAL
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STOCK OF TIMBER LODGE STEAKHOUSE, INC.
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Canadian walleye and slow-roasted prime rib. TBRL's revenues for the quarter
ending September 10, 1997 were $6,335,297 compared to $4,155,907 for the year
earlier quarter in 1996. Net income for the same quarter was $275,097 in 1997
compared to $198,245 for 1996.
Dermot F. Rowland, Chairman and CEO of TBRL stated, "We are very
excited about joining with Green Burrito and its affiliated companies. Bill
Foley's success in the restaurant industry speaks for itself and we look forward
to working with Bill to expand our market presence and reduce our expenses
through operating synergies."
William P. Foley, II, Chairman of GBFC said "By acquiring twelve to
twenty JB's Restaurants and converting them to Timber Lodge restaurants in
western states such as Arizona, Idaho, Utah and New Mexico, Timber Lodge will
rapidly grow from a sixteen unit chain to a twenty-eight to thirty-six unit
chain. We anticipate that this rapid growth combined with the excellent quality
of Timber Lodge's food, service and facilities will position the Company to
become a consolidator in the casual dining steakhouse restaurant segment while
it continues to grow Green Burrito's existing business through the very
successful Carl's Jr./Green Burrito dual-concept restaurants. We believe this
will be a dynamic combination."
Headquartered in Anaheim, California, GBFC, along with its franchisees,
operates 185 Green Burrito restaurants in eight (8) states, predominantly
California and Arizona. The Green Burrito menu includes a selection of
combination platters that feature enchiladas, tacos and, of course, a variety of
delicious burritos.
-more-
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GB FOODS CORPORATION AND TIMBER LODGE STEAKHOUSE, INC. ANNOUNCE THE EXECUTION OF
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A LETTER OF INTENT WHEREBY GB FOODS WILL ACQUIRE ALL OF THE OUTSTANDING CAPITAL
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STOCK OF TIMBER LODGE STEAKHOUSE, INC.
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"Safe Harbor" Statements under the Private Securities Litigation Reform
Act of 1995: Statements which are not historical facts contained in this release
are forward looking statements that involve risks and uncertainties, and results
could vary materially from the description contained herein and other risks as
may be detailed in the Company's Securities and Exchange Commission filings.
# # #
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EXHIBIT 99.2
December 9, 1997
VIA FACSIMILE AND FEDERAL EXPRESS
Mr. Dermot F. Rowland
Chief Executive Officer
Timber Lodge Steakhouse, Inc.
4021 Vernon Avenue South
St. Louis Park, Minnesota 55416
RE: LETTER OF INTENT TO PURCHASE STOCK
Dear Dermot:
We recently discussed the possibility of GB Foods Corporation ("GBFC"),
or its nominee, acquiring all of the outstanding capital stock of Timber Lodge
Steakhouse, Inc. ("TLSI"). In that regard, and with a view towards reaching an
agreement on the terms and conditions of definitive acquisition documents, GBFC
proposes that this letter serve as a memorandum of its intentions with respect
to the business points of this proposed transaction subject to the terms and
conditions set forth below.
1. STOCK PURCHASE. GBFC proposes to acquire one hundred percent (100%)
of TLSI's issued and outstanding capital stock, free and clear of all liens,
claims, encumbrances and security interests of any nature whatsoever (the
"Proposed Transaction").
2. PURCHASE PRICE. Upon the consummation of the Proposed Transaction
(the "Closing"), each share of capital stock of TLSI shall be converted into
Nine Dollars ($9.00) of GBFC Common Stock. The GBFC Common Stock to be issued at
Closing shall be valued based upon the average closing price of GBFC's Common
Stock for the five (5) trading days ending on the date of the execution of this
Letter of
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Dermot F. Rowland
Timber Lodge Steakhouse, Inc.
December 9, 1997
Page 2
Intent by TLSI. In addition, granted options and warrants of TLSI shall be
converted to options and warrants of GBFC based upon the above described
valuation.
The parties shall cooperate to the extent reasonable to structure the
Proposed Transaction to provide favorable tax treatment for the TLSI
shareholders; provided, however, that it is expressly understood that TLSI and
its shareholders shall obtain and receive their own independent tax advice with
respect to the Proposed Transaction and are not, and will not, rely on any
statements or advice of GBFC or any of its affiliates, or any of their
respective officers, directors, employees, agents or representatives, with
respect to the tax ramifications of the Proposed Transaction.
In addition, the Parties shall use their best efforts to ensure that
the Proposed Transaction will be accounted for as a pooling of interests and
neither party shall from the date hereof take any action which would prohibit
the Proposed Transaction from receiving such accounting treatment.
GBFC's obligations to execute definitive agreements and to close the
Proposed Transaction is expressly conditioned upon GBFC completing and being
satisfied, in its absolute and sole discretion, with its due diligence
investigation, as set forth in paragraph 4, below.
3. THE CLOSING. The Closing shall occur as soon as practical following
the completion of certain conditions, including the following:
(a) GBFC's due diligence investigation as set forth in paragraph
4, below;
(b) The parties execution of binding acquisition agreements;
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Dermot F. Rowland
Timber Lodge Steakhouse, Inc.
December 9, 1997
Page 3
(c) Each party obtaining all required corporate, regulatory and
other third party approvals, including, without limitation,
all necessary approvals by the parties respective Boards of
Directors and shareholders;
(d) The TLSI shareholders obtaining releases of any and all liens,
claims, encumbrances and security interests on their TLSI
capital stock;
(e) TLSI acquiring from CKE Restaurants, Inc., or its affiliate,
between twelve (12) and (20) JB's restaurants for conversion
to Timber Lodge Steakhouse restaurants; and
(f) Such other reasonable and standard conditions as we shall
mutually agree.
4. DUE DILIGENCE. As a condition precedent to the execution of any
binding acquisition agreement on the terms and conditions set forth herein, or
upon any other terms and conditions agreed upon by the parties, GBFC and/or
GBFC's agents will be provided the opportunity to conduct a comprehensive due
diligence investigation of the assets, liabilities, financial condition,
business and operations of TLSI. In order to conduct such investigation, GBFC
shall have full access to all documents concerning TLSI, including, but not
limited to, all books, records (including financial and accounting books and
records), reports, files, financial information, payroll records, operating
leases, real property records (including any and all environmental reports or
documents), documents evidencing pending or threatened litigation and claims,
corporate records, employee benefit plans, and all employment contracts. TLSI
will also make its outside accountants and their work papers available to GBFC
to assist in GBFC's due diligence. TLSI will allow GBFC access to its principal
office location and its restaurants by appointment upon reasonable notice. TLSI
acknowledges that GBFC and its representatives have not yet been afforded full
access to such information or an opportunity to fully review such information
and, in the event GBFC is not satisfied with such review, in its absolute and
sole discretion, GBFC will have
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Dermot F. Rowland
Timber Lodge Steakhouse, Inc.
December 9, 1997
Page 4
no obligation to proceed with the Proposed Transaction. In addition to the
above, it is important that GBFC have an opportunity to maintain human resource
continuity in the TLSI restaurants following the Closing. As such TLSI shall
provide GBFC with full access to all management personnel immediately following
the execution of this Letter of Intent to enable GBFC to conduct interviews of
key personnel in connection with potential post- Closing employment. GBFC will
cooperate with TLSI to conduct such interviews with minimal disruption to the
business of the TLSI restaurants. Notwithstanding anything to the contrary
contained in this paragraph 4, TLSI shall not be obligated to disclose (or grant
GBFC access to) any documents subject to the attorney-client privilege, the
attorney work product doctrine or confidentiality agreements with third parties;
furthermore, GBFC shall not use any information obtained pursuant to this
paragraph 4 to gain a business or competitive advantage over TLSI in connection
with the operation of its business.
5. UNDERTAKINGS. In consideration of the substantial time, effort and
expense GBFC will expend in connection with the preparation and execution of the
acquisition agreements, the filing of appropriate documents with governmental
and regulatory agencies, and the various inspections, investigations and reviews
referred to above, between the date of the execution by TLSI of this Letter of
Intent and the Closing, and except as may be required by law, TLSI undertakes
and agrees to:
(a) continue to operate TLSI and its restaurants in the ordinary
course of business, consistent with past practice and custom;
(b) not do anything which would have a material adverse effect on
the business, assets, operations, properties, condition
(financial or otherwise), prospects or continued viability of
TLSI and its restaurants;
(c) not pay any extraordinary compensation to any of TLSI's
officers, directors, shareholders or employees;
(d) except as expressly contemplated herein, not issue or
sell, or
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Dermot F. Rowland
Timber Lodge Steakhouse, Inc.
December 9, 1997
Page 5
contract to issue or sell, any securities of TLSI
(including options or warrants), or any rights to acquire any
such securities;
(e) not incur any additional debt other than in the ordinary
course of business that may adversely affect the value of the
capital stock of TLSI;
(f) not pay any dividends, redeem any securities or otherwise
cause any assets to be distributed to TLSI's shareholders;
(g) not solicit or initiate any further discussions or engage in
further negotiations or discussions with anyone else other
than GBFC with respect to a sale or transfer of all or any
part of TLSI's capital stock or assets, without first making
any such discussions or negotiations expressly subject to
TLSI's obligations to GBFC, and promptly inform GBFC of any
offer or proposal, directly or indirectly, with respect to the
foregoing, and furnish such information with respect thereto
as GBFC may reasonably request; and
(h) except as expressly contemplated herein, between the date of
the execution of this Letter of Intent and the Closing, TLSI
will act in good faith and use its best efforts to preserve
intact its business organization, goodwill, customers,
suppliers, and others having business relations with it.
6. EXPENSES. It is expressly understood that each party hereto shall be
responsible for such party's costs and expenses incurred in connection with the
transactions contemplated hereby, including legal and accounting fees.
7. ANNOUNCEMENTS. Except to the extent the parties are required by
applicable law to do otherwise, prior to the execution of definitive agreements,
neither
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Dermot F. Rowland
Timber Lodge Steakhouse, Inc.
December 9, 1997
Page 6
party shall issue any statement or communication to the public regarding
the Proposed Transaction without the consent of the other party, which consent
shall not be unreasonably withheld, and each party shall keep the Proposed
Transaction and information obtained from the other party strictly confidential
except (i) as to such party's employees, representatives and/or agents directly
participating in its evaluation of the Proposed Transaction; (ii) as required by
law; and (iii) to the extent such information otherwise becomes public.
Notwithstanding the above, each party recognizes that the other party is a
public company and subject to certain disclosure requirements and acknowledges
that required public disclosures shall not constitute a breach of this Letter of
Intent.
8. BROKERS. The agreement contemplated hereby will contain a
representation by each party that no broker or finder was involved in the
Proposed Transaction and an indemnification for any costs to the other party
caused by a breach or an alleged breach thereof.
5. OUTLINE ONLY; NO CONTRACT. The parties do not intend this letter to
be a contract or binding agreement; provided, however, that the parties do
intend that paragraphs 4 (Due Diligence), 5 (Undertakings), 6 (Expenses), 7
(Announcements), 9 (Outline Only; No Contract), 10 (Termination), 11
(Representation), 12 (Expiration of Offer) and 13 (Waiver of Tort Claims) shall
be binding. A binding agreement will not exist unless and until the parties have
executed a definitive acquisition agreement 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 an agreed transaction,
including without limitation, representations and warranties, conditions
precedent and indemnities, and that such essential terms will be the subject of
further negotiation. Upon execution and satisfactory completion of GBFC's due
diligence, GBFC shall instruct its counsel to prepare definitive acquisition
agreements which shall include customary representations, warranties, covenants,
and conditions, including indemnification and security provisions.
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Dermot F. Rowland
Timber Lodge Steakhouse, Inc.
December 9, 1997
Page 7
10. TERMINATION. This Letter of Intent shall continue in effect so long
as GBFC is proceeding diligently toward completion of the proposed transaction,
provided that either party may terminate this Letter of Intent upon written
notice to the other party at any time after February 1, 1997, if a definitive
agreement shall not have been executed by such date.
11. REPRESENTATION. By signing this Letter of Intent in the space 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 above.
12. EXPIRATION OF OFFER. This Letter of Intent shall expire for all
purposes if it has not been accepted by you and returned to GBFC on or before
5:00 p.m. on December 11, 1997.
13. WAIVER OF TORT CLAIMS. Each party hereby waives for itself and for
its successors and assigns any claim for damages (including 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. It is understood that, with
respect to such tort claims only, the parties expressly waive and relinquish all
rights and benefits afforded by Section 1542 of the Civil Code of the State of
California and do so understanding and acknowledging the significance of such
specific waiver of Section 1542. Section 1542 of the Civil Code of the State of
California states as follows:
A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
If the foregoing meets with your approval, kindly execute of this
Letter of
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Dermot F. Rowland
Timber Lodge Steakhouse, Inc.
December 9, 1997
Page 8
Intent and return an executed copy to my attention by facsimile at
your earliest convenience.
Very truly yours,
GB FOODS CORPORATION
Andrew F. Puzder
Chief Executive Officer
Accepted and Agreed to as of
this ___ day of December, 1997, by:
TIMBER LODGE STEAKHOUSE, INC.
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Dermot F. Rowland, Chief Executive Officer
