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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: June 10, 1998
(Date of earliest event reported)
KOO KOO ROO, INC.
(exact name of registrant as specified in its charter)
DELAWARE COMMISSION FILE: 22-3132583
(State or other jurisdiction 0-19548 (I.R.S. Employer
of incorporation or Identification No.)
organization)
11075 SANTA MONICA BOULEVARD
SUITE 225
LOS ANGELES, CALIFORNIA 90025
(Address of Principal executive offices, including zip code)
(310) 479-2080
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
(a) On June 10, 1998, Koo Koo Roo, Inc. (the "Company") disseminated a
press release, a copy of which is filed herewith as Exhibit 99.1 and
incorporated herein by this reference. The press release announced that the
Company had entered into a definitive merger agreement with Family Restaurants,
Inc.
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ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
EXHIBIT
NO. DESCRIPTION
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99.1 Press Release dated June 10, 1998
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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,
KOO KOO ROO, INC.
Date: June 10, 1998 By /s/ Ronald Garber
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Name: Ronald D. Garber
Title: Secretary
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EXHIBIT INDEX
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99.1 Press Release dated
June 10, 1998
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EXHIBIT 99.1
Contact: Sitrick And Company
Michael Sitrick
Jeff Lloyd
(310) 788-2850
KOO KOO ROO, INC. AND FAMILY RESTAURANTS, INC. TO MERGE;
IACOCCA CALLS COMBINATION AN IDEAL STRATEGIC FIT
LOS ANGELES, CALIF., JUNE 10, 1998 -- KOO KOO ROO, INC. (NASDAQ:
KKRO), the operator of 38 branded restaurants renowned for its proprietary
Original Skinless Flame Broiled Chicken, and Family Restaurants, Inc. (FRI), the
largest operator of full service Mexican restaurants in the world, today
announced the signing of a definitive agreement to merge.
The merger agreement was unanimously approved by both companies'
Boards of Directors. Merger documents are expected to be filed as part of a
registration statement within the next few weeks, and proxy materials are
expected to be mailed to Koo Koo Roo's stockholders within the next 60-90 days.
FRI is the privately-held parent company of the El Torito and Chi-Chi's Mexican
restaurant chains. It is primarily owned by affiliates of Apollo Advisors, L.P.
and Leonard Green & Partners, L.P. and by FRI management.
Lee Iacocca, Acting Chairman of the Board of Koo Koo Roo, called the
combination of the two companies "an ideal strategic fit." He continued, "We
believe the combination of these two companies will produce very powerful
synergies and puts us on a solid platform from which we should be able to
realize our full growth potential. As both acting Chairman and a shareholder of
Koo Koo Roo, I am very excited about the prospects that the merger of these two
companies brings."
The transaction, which will create a 325 unit restaurant company with
operations in 31 states and 11 foreign countries, is subject to Koo Koo Roo
stockholder approval and other customary contingencies. FRI had revenues of
approximately $462 million and EBITDA of approximately $18.4 million for the
trailing twelve month period ended March 31, 1998. On a
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proforma basis for the same period, Koo Koo Roo had revenues of approximately
$79.5 million, and an EBITDA loss from continuing operations of approximately
$22.7 million, including approximately $20.6 million related to restructuring,
store closings and other charges.
Under the terms of the merger, Koo Koo Roo shareholders will receive
one share of stock in the newly registered company - to be called Koo Koo Roo
Enterprises, Inc. - in exchange for each share of Koo Koo Roo stock they
currently own, representing approximately 33% of the new company. Concurrent
with the signing of the merger agreement, FRI provided a $3 million loan to Koo
Koo Roo, Inc. Additionally, in connection with the planned merger, FRI will
issue new senior secured discount notes for net proceeds of approximately $21
million and is expanding its existing working capital line of credit by an
additional $20 million. The transaction will be accounted for as a purchase.
Kevin Relyea, Chairman of the Board, President and CEO of FRI, will
hold the same positions in the new company. Messrs. Iacocca and William Allen,
CEO of Koo Koo Roo, will remain with the merged company as members of the Board
of Directors.
Mr. Relyea said: "This merger will allow us to use the experience of
our management team to maximize the synergies of our restaurant companies,
including leveraging our purchasing power and support structure. In addition,
there now is the financial capability to invigorate the company's expansion
plan. We believe the new combined entity is well positioned for future growth.
Together, the companies should be a powerful force in the market."
He continued, "Koo Koo Roo has a product that is ideal for the growing
home meal replacement segment. People love Koo Koo Roo's food."
William Allen, CEO of Koo Koo Roo, stated, "The timing for the merger
is perfect. Koo Koo Roo's management is completing a financial restructuring
that has reduced overhead by $8 to $9 million per year and is in the process of
selling off non-core assets. FRI has the management depth, expertise and proven
track record of running a large successful group of restaurants."
Mr. Allen added that FRI is the ideal strategic partner to expand the
outstanding growth opportunities for the Koo Koo Roo concept without
compromising its quality, service or value.
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FRI operates 273 full-service Mexican restaurants in 30 states, making
it the largest operator of full-service Mexican restaurants in the world, both
in number of restaurants and annual revenue. Approximately 65% of its
restaurants are located in California, Ohio, Pennsylvania, Michigan, Illinois
and Indiana. FRI is also the licensor of 21 restaurants outside the United
States. FRI's restaurants operate primarily under the Chi-Chi's, El Torito, and
Casa Gallardo concepts.
Koo Koo Roo, Inc. operates 38 Koo Koo Roo California Kitchen
restaurants which are located in California, Florida, and Nevada. Renowned for
its proprietary Original Skinless Flame Broiled ChickenTM, Koo Koo Roo delivers
a healthy alternative within the casual dining and take-home meal replacement
market. In addition, Koo Koo Roo operates 14 Hamburger Hamlet restaurants in
California and in the Washington, D.C. beltway area. A Canadian company in
which Koo Koo Roo has a 28% investment also operates three Koo Koo Roo
California Kitchen restaurants in Toronto. The company has announced the
pending sale of its Arrosto Coffee Company and is continuing its previously
announced efforts to divest Color Me Mine, a do-it-yourself ceramic pottery
concept.
F.M. Roberts & Company, Inc., of Los Angeles, provided investment
banking advice and strategic counsel for Koo Koo Roo. Mr. Allen said that Fred
Roberts did an outstanding job in bringing the parties together. Libra
Investments, Inc., advised FRI in the merger.
Forward-looking statements and comments in this press release are made
pursuant to the safe-harbor provisions of Section 21E of the Securities Exchange
Act of 1934. Such statements relating to, among other things, the prospects for
the companies to complete the merger and enhance operating results, are
necessarily subject to risks and uncertainties, some of which are significant in
scope and nature. These risks are further discussed in the periodic reports and
registration statements filed by KKR and FRI from time to time with the
Securities and Exchange Commission.
