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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
THE KRYSTAL COMPANY
(Name of Issuer)
COMMON STOCK, WITHOUT PAR VALUE
(Title of Class of Securities)
501148100
(CUSIP Number)
Thomas Wardell, One Peachtree Center, Suite 5300
303 Peachtree Street, Atlanta, Georgia 30303, (404) 527-4990
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(Name, address and telephone number of Person
Authorized to Receive Notices and Communications)
September 26, 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(b)(3) or (4), check the following box. [ ]
Note: Six copies of this statement, including all exhibits, should be filed with
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the Commission. See Rule 13d-1(a) for other parties to whom copies are to
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be sent.
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*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
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(Page 1 of 10 Pages)
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Port Royal Holdings, Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
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(b)
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3. SEC USE ONLY
4. SOURCE OF FUNDS
BK, 00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e): [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Georgia corporation
7. SOLE VOTING POWER
-0-
8. SHARED VOTING POWER
100
9. SOLE DISPOSITIVE POWER
-0-
10. SHARED DISPOSITIVE POWER
100
(Page 2 of 10 Pages)
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
100
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
100%
14. TYPE OF REPORTING PERSON
CO
(Page 3 of 10 Pages)
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Philip H. Sanford
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
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(b)
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3. SEC USE ONLY
4. SOURCE OF FUNDS
BK, PF, 00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e): [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7. SOLE VOTING POWER
-0-
8. SHARED VOTING POWER
100
9. SOLE DISPOSITIVE POWER
-0-
10. SHARED DISPOSITIVE POWER
100
(Page 4 of 10 Pages)
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
100
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
100%
14. TYPE OF REPORTING PERSON
IN
(Page 5 of 10 Pages)
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Item 1. Security and Issuer.
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The class of equity securities to which this statement relates is the
common stock, without par value ("Common Stock"), of The Krystal Company, a
Tennessee corporation (the "Company"), and the surviving corporation of the
merger of TKC Acquisition Corp. ("TKC"), a wholly-owned subsidiary of Port Royal
Holdings, Inc. ("Port Royal") with and into The Krystal Company ("Krystal"). The
Company has its principal executive offices at One Union Square Chattanooga,
Tennessee 37402.
Item 2. Identity and Background.
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This statement represents the joint filing of Port Royal and Philip H.
Sanford, the 26.0% shareholder of Port Royal.
A. Port Royal Holdings, Inc.
Port Royal is a Georgia corporation with principal executive offices
located at 303 Peachtree Street, Suite 5300, Atlanta, Georgia 30308.
Port Royal was incorporated on June 30, 1997 and has engaged in no
activities other than those incident to its formation and the transactions
described in Item 4 below.
Port Royal has not, during the last five years, been convicted in any
criminal proceeding (excluding traffic violations or similar misdemeanors).
Port Royal has not, during the last five years, been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which it 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.
B. Philip H. Sanford
Philip H. Sanford is the Chairman, Chief Executive Officer and
Director of the Company, One Union Square, Chattanooga, Tennessee 37402, which
is in the quick service restaurant business. In addition, Mr. Sanford is the
Chairman, Chief Executive Officer and Director of Port Royal, which has its
principal executive offices at 303 Peachtree Street, Suite 5300, Atlanta,
Georgia 30308. Pursuant to a shareholders agreement, Mr. Sanford is entitled to
elect two of the five directors of Port Royal.
Mr. Sanford has not, during the last five years, been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(Page 6 of 10 Pages)
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Mr. Sanford has not, during the last five years, been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which he 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.
Mr. Sanford is a United States citizen.
C. Executive Officers and Directors of Port Royal
Principal Occupation or Employment,
Principal Business of Employer,
Name & Title and Business Address
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Philip H. Sanford, Chairman, Chairman, Chief Executive Officer and
Chief Executive Officer and Director of The Krystal Company, One
Director Union Square, Chattanooga, Tennessee
37401; Develops, operates and franchises
quick-service restaurants.
James F. Exum, Jr., President, President, Chief Operating Officer and
Chief Operating Officer and Director of The Krystal Company, One
Director Union Square, Chattanooga, Tennessee
37402; Develops, operates and franchises
quick-service restaurants.
A. Alexander Taylor, II, Partner, Miller & Martin, Suite 1000
Secretary and General Counsel Volunteer Building, 832 Georgia Avenue,
Chattanooga, Tennessee 37402; Law firm.
Benjamin R. Probasco, Director President of Probasco & Company, 100
East 10th Street, Suite 501, Chattanooga,
Tennessee 37402; Real estate development
firm.
W.A. Bryan Patten, Director President of Patten & Patten, Inc., 526
Lookout Street, Chattanooga, Tennessee
37403; Registered investment advisory
firm.
Richard C. Patton, Director President of Investments at Ingram
Industries, 4400 Harding Road, Nashville,
Tennessee 37205; Holding company for a
variety of businesses (including
distributorship of books, video
entertainment and computers).
(Page 7 of 10 Pages)
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To the best knowledge of Port Royal and Mr. Sanford, none of the
above-listed Executive Officers and Directors of Port Royal has, during the last
five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
To the best knowledge of Port Royal and Mr. Sanford, none of the
above-listed Executive Officers and Directors of Port Royal has, during the last
five years, been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which he 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.
All the Executive Officers and Directors of Port Royal are U.S.
citizens.
Item 3. Source and Amount of Funds or Other Consideration.
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The Merger was consummated on September 26, 1997. The Merger, including
the repayment of outstanding indebtedness of Krystal, was funded through (i) an
equity contribution from Port Royal in the amount of $35 million, (ii) the net
proceeds of a private placement of senior notes by the Company in the amount of
$94,975,000 and (iii) borrowings by the Company in the amount of $17,212,033.
The various engagement letters and commitment letters relating to the
borrowings and the sale of notes were attached to the Schedule 13D previously
filed with the SEC.
Item 4. Purpose of Transaction.
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Port Royal, TKC and Krystal entered into an agreement and plan of merger
(the "Merger Agreement"), dated as of July 3, 1997, pursuant to which (1) TKC
was to be merged with and into Krystal (the "Merger"); (2) each outstanding
share of Krystal common stock, other than those held in the Treasury of Krystal
(which shares were to be canceled and no payment made in respect thereof), was
to be converted into the right to receive $14.50 in cash without interest; and
(3) the separate existence of TKC was to cease and the Company, as the surviving
corporation, was to become a wholly-owned subsidiary of Port Royal and was to
continue to exist under the laws of the State of Tennessee. The Merger Agreement
was attached to the Schedule 13D previously filed with the SEC. As set forth
above in Item 3, the Merger was consummated on September 26, 1997.
Upon consummation of the Merger, trading in Krystal common stock ceased,
and the Krystal common stock is no longer listed on the NASDAQ National Market
System. The Common Stock is not traded nor is it listed on a stock exchange.
(Page 8 of 10 Pages)
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Item 5. Interest in Securities of the Issuer.
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The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock by each director and executive officer
of the Company.
Shares Beneficially Owned Sharing Voting
Name Number Percent of Class and Dispositive Power
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Port Royal 100 100% 100
Philip H. Sanford/1/ 100 100% 100
James F. Exum, Jr. 0 0 0
Benjamin R. Probasco 0 0 0
W.A. Bryan Patten 0 0 0
Richard C. Patton 0 0 0
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/1/ Mr. Sanford is the beneficial owner of 26.0% of the outstanding common
stock or Port Royal, the Company's parent, and pursuant to a shareholders
agreement, is entitled to select two of Port Royal's five directors. Mr. Sanford
is therefore deemed to be the indirect beneficial owner of 100% of the Company's
Common Stock.
Otherwise, and except as set forth herein, Port Royal and Mr. Sanford
have not, and to the best of their knowledge, none of the executive officers or
directors of Port Royal has, effected any transactions in the Company's Common
Stock during the past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
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Securities of the Issuer.
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Neither Port Royal nor Philip H. Sanford, and to the best of their
knowledge, none of the executive officers or directors of Port Royal, has any
contracts, arrangements, understandings or relationships (legal or otherwise)
with any person with respect to any securities of the Company, including, but
not limited to, transfer or voting of any of such securities, finder's fees,
joint ventures, loan or option agreements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
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None.
(Page 9 of 10 Pages)
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SIGNATURES
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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.
PORT ROYAL HOLDINGS, INC.
Date: October 9, 1997 By: /s/ Philip H. Sanford
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Name: Philip H. Sanford
Title: Chairman & Chief Executive Officer
PHILIP H. SANFORD
Date: October 9, 1997 By: /s/ Philip H. Sanford
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Philip H. Sanford
(Page 10 of 10 Pages)
