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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 Act of 1934
Date of Report (Date of earliest event reported): July 15, 1998
BOSTON CHICKEN, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-22802 36-3904053
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
14123 Denver West Parkway, P.O. Box 4086, Golden, Colorado 80401-4086
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(Address of principal executive offices)
(303) 278-9500
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or former address, if changes since last report)
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Item 5. Other Events.
On July 15, 1998, Boston Chicken, Inc. (the "Company") announced that it
had renegotiated its senior credit facility with the Bank of America National
Trust and Savings Association ("BA"), as agent and participant under the
Company's $85 million 1996 revolving line of credit (the "1996 Revolver
Facility"), and with General Electric Capital Corporation ("GECC"), as agent and
a participant under its 1996 Master Lease Agreement (the "1996 Master Lease
Facility," and together with the 1996 Revolver Facility and the Amended and
Restated Facilities Agreement related thereto, the "1996 Credit Facility"),
pursuant to which such senior lenders, certain other participants in the 1996
Credit Facility and certain new lenders have provided the Company with $39.3
million in financing, consisting of a $35.0 million revolving credit facility
(the "Liquidity Facility"), structured as a new tranche under the 1996 Revolver
Facility, and a $4.3 million supplemental revolving loan drawn under the amended
1996 Revolver Facility. The Liquidity Facility matures on October 17, 1998, at
which time all amounts outstanding under the 1996 Credit Facility (including the
approximately $219 million outstanding prior to the amendment of the 1996 Credit
Facility) also comes due. The Company announced the Liquidity Facility would be
used primarily for working capital, refinancing and restructuring costs, master
lease interest and partial principal payments which were due and paid on July
15, 1998 and interest due in August on the Company's 4 1/2% convertible
subordinated debentures. Pursuant to the Liquidity Facility, the lenders
thereunder have agreed to forbear from the exercise of any remedies with respect
to the Company's noncompliance with the second quarter net average weekly per
store sales covenant and other financial covenants contained in the 1996 Credit
Facility. Covenants contained in the Liquidity Facility include a minimum
cumulative systemwide cash flow requirement and adherence by the Company to an
agreed upon operating budget.
Consistent with the Company's previous announcements, the Company said it
will attempt to refinance its senior credit, including the Liquidity Facility
and the 1996 Credit Facility, restructure its outstanding publicly traded
convertible subordinated debt and raise additional debt and/or equity financing
before maturity of the Liquidity Facility and the 1996 Credit Facility on
October 17, 1998. In connection therewith, the Company also announced that it
had hired BTAlex.Brown to assist it in restructuring the Company's publicly
traded convertible subordinated debt, currently totaling approximately $623
million, and in refinancing the senior debt. There can be no assurance, however,
that Boston Chicken will be successful in such restructuring and refinancing
efforts. Any such restructuring, refinancing and/or additional financing may
entail significant equity dilution to the holders of the Company's Common Stock
at that time.
The Company also announced that it had converted a total of approximately
$564 million of loans to ten area developers into a majority equity ownership
interest in each of those area developers. As a result of the conversions, the
number of Company-owned Boston Market stores increased by 527, bringing the
total number of Company-owned stores to 936, or approximately 81% of the Boston
Market system.
Conversions of the loans were made in connection with the Company's
acquisition of BC Equity Funding, L.L.C. ("BCEF") and Market Partners, L.L.C.
("Market Partners"), funds that previously held preferred equity interests in 11
of the Company's 13 area developers, including the ten area developers whose
loans were converted. BCEF and Market Partners were acquired pursuant to a
merger of those funds with a wholly-owned subsidiary of the Company for
aggregate consideration of (i) $126.8 million of the Company's 10% Series A
Exchangeable Preferred Stock, par value $0.01 per share (the "Preferred Stock"),
(ii) 3.5 million shares of the Company's Common Stock, par value $0.01 per
share, and (iii) $10.0 million in cash. The 10% percent dividend on the
Preferred Stock is payable in additional shares of Preferred Stock for a period
of three years and in cash thereafter. The Preferred Stock is optionally
redeemable by the Company at any time, in cash, at redemption prices which start
at 50% of the face amount of the Preferred Stock and increase over time. The
Preferred Stock is mandatorily redeemable in 2005 at a price equal to 110% of
the face amount of the Preferred Stock.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors described in Boston Chicken's Form 10-K and
other filings with the Securities and Exchange Commission which may cause the
actual results or achievements expressed or implied thereby to be materially
different from any future results or achievements. All forward-looking
statements relating to the refinancing and/or restructuring of the Company's
debt are subject to, among other things, the formulation by Boston Chicken and
its creditors of an acceptable refinancing and
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restructuring plan, the consent of all or some of such creditors to such plan,
the availability to Boston Chicken of various refinancing alternatives, and
market conditions generally. In addition, such efforts are also subject to the
Company's financial results and condition prior to, and at the time of, such
restructuring and refinancing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: July 21, 1998
BOSTON CHICKEN, INC.
By: /s/ Lawrence E. White
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Name: Lawrence E. White
Title: Chief Financial Officer
