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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 (Date of earliest event reported) October 2, 1998
BOSTON CHICKEN, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-22802 36-3904053
(Commission File Number) (I.R.S. Employer Identification No.)
14123 DENVER WEST PARKWAY
P. O. BOX 4086
GOLDEN, CO 80401-4086
(303) 278-9500
(Address of Principal Executive Offices and Telephone Number,
Including Area Code)
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On October 5, 1998, Boston Chicken, Inc. (the "Company") and its Boston
Market related subsidiaries filed voluntary petitions for protection under
Chapter 11 of the Federal Bankruptcy Code in the U.S. Bankruptcy Court for the
District of Arizona in Phoenix. Later that same day, the Bankruptcy Court
approved the Company's motions relating to the use of cash collateral, the
payment of pre-petition salaries, wages and benefits, and trade payables, and
entered an order approving a $70 million debtor-in-possession financing facility
entered into with a group of lenders lead by General Electric Capital
Corporation and Bank of America National Trust and Savings Association.
A copy of the Company's two press releases related to the foregoing matters
has been filed with the SEC as an exhibit to this Form 8-K.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
On October 2, 1998, the Board of Directors of the Company approved the
engagement of PricewaterhouseCoopers LLP as principal accountant to audit the
Company's consolidated financial statements.
On October 2, 1998, Arthur Andersen LLP was dismissed, by the Company's
Board of Directors and the Company's audit committee, as the Company's principal
accountant and as principal accountant for the Company's subsidiaries other than
Einstein/Noah Bagel Corp. (which is expected to make its own decision).
Arthur Andersen LLP's reissued report on the Company's consolidated
financial statements for the fiscal year ended December 28, 1997 includes a
qualification which states there is substantial doubt about the Company's
ability to continue as a going concern.
There have been no disagreements between management and Arthur Andersen LLP
during the Company's two most recent fiscal years and any subsequent interim
period preceding the engagement of PricewaterhouseCoopers LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure of a nature which if not resolved to the satisfaction of
Arthur Andersen LLP would have caused it to make reference in connection with
its report to the subject matter of the disagreements.
Arthur Andersen LLP has issued a letter addressed to the Securities and
Exchange Commission stating that Arthur Andersen LLP agrees with the statements
contained in the preceding three paragraphs. A copy of that letter is attached
as an exhibit to this Form 8-K.
2
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit Description
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16 Letter from Arthur Andersen LLP
20 Press Releases pertaining to voluntary reorganization under
Chapter 11
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3
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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.
BOSTON CHICKEN, INC.
Date: October 8, 1998 By: Lawrence E. White
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LAWRENCE E. WHITE
Executive Vice President
4
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EXHIBIT INDEX
Exhibit Description
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16 Letter from Arthur Andersen LLP
20 Press Releases pertaining to voluntary reorganization
under Chapter 11
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5
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[LETTERHEAD OF ARTHUR ANDERSEN]
EXHIBIT 16
October 7, 1998
Office of Chief Accountant
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Dear Sir/Madam:
We have read Item 4 included in the Form 8-K dated October 2, 1998 of Boston
Chicken, Inc. filed with the Securities and Exchange Commission and are in
agreement with the statements contained therein.
Very truly yours,
/s/ Arthur Andersen LLP
cc: Mr. Lawrence E. White
Boston Chicken, Inc.
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EXHIBIT 20
[LOGO OF BOSTON MARKET APPEARS HERE]
Media Contact: Karen Rugen
303-216-5076 OR 5009
Investor Information: 1-800-480-5010
Analysts Only: Melissa Marsden
303-216-5652
BOSTON CHICKEN TO VOLUNTARILY REORGANIZE UNDER CHAPTER 11;
MOST RESTAURANTS AND EMPLOYEES UNAFFECTED
$70 Million in Debtor-in-Possession Financing Committed by Lenders;
Bondholders Support Restructuring Plan
Golden, Colo.- October 5, 1998 - Boston Chicken, Inc. (Nasdaq: BOST) said today
that the company and its Boston Market-related subsidiaries have filed voluntary
petitions for protection under Chapter 11 of the Federal Bankruptcy Code in the
U.S. Bankruptcy Court for the District of Arizona in Phoenix. The company also
said that it closed 178 of the 1143 restaurants in the Boston Market chain and
offered transfers to all but approximately 500 of more than 18,500 employees.
The company also announced it has received a commitment from a group of lenders
led by General Electric Capital Corporation and Bank of America for up to $70
million in Debtor-in-Possession (DIP) financing to refinance up to $35 million
of existing senior debt and to give the company access to up to $35 million of
additional working capital, should it be required, to pay among other things,
salaries and benefits to employees, to pay vendors and to pay interest on senior
secured debt. In addition, the company is in discussions with its senior
creditors and other parties for long-term financing to support the company's
business plan after it emerges from Chapter 11.
For the past three months, the company has been discussing its restructuring
plan with an ad hoc committee representing its three classes of public
subordinated debt, which total approximately $625 million. The committee has
indicated its support of management and its general support of a plan to convert
the bonds and certain other unsecured debt into the common stock of the
reorganized company.
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Boston Chicken, Inc.
Page 2
J. Michael Jenkins, Boston Chicken chairman, president and chief executive
officer, said, "We had hoped to restructure out-of-court and gave it our best
effort. We have considerably improved restaurant operations, significantly
reduced overhead, and have made progress with our creditors toward a financial
restructuring. We filed today because we realized we wouldn't be able to
complete our restructuring plan by October 17. With the support of our senior
creditors and subordinated debtholders, we anticipate a timely exit from Chapter
11."
As the company has previously disclosed, approximately $283 million in senior
debt comes due October 17, 1998.
"Today's action ultimately should reduce our total debt by nearly two-thirds.
With the commitment from our employees and the support of our vendors and
creditors, we'll be able to continue to earn the loyalty of our customers and
have a fresh start as a stronger, more vital company with excellent prospects
for future growth," Jenkins said.
More than 950 Boston Market restaurants in nearly 90 cities nationwide remain
open. While most of the closed restaurants are scattered throughout the
country, all Boston Market restaurants in the following cities and towns have
closed:
Closed Market Areas Number of Stores
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Birmingham, Alabama 3
Chico, California 1
Moline, Illinois 1
Des Moines, Iowa 4
Bowling Green, Kentucky 1
Lexington, Kentucky 3
Louisville, Kentucky 5
Joplin, Missouri 1
St. Joseph, Missouri 1
West Lebanon, New Hampshire 1
Erie, Pennsylvania 1
Sioux Falls, South Dakota 1
Memphis, Tennessee 2
Nashville, Tennessee 7
These markets represent 32 of the 178 closed restaurants.
Virtually all employees from closed Boston Market restaurants will be
transferred to nearby Boston Market locations.
In addition, the company said that due to today's filing, it will no longer
advance additional funding on convertible loans to Boston West, L.L.C. and BC
Northwest, L.L.C., area developers that formerly
-MORE-
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Boston Chicken, Inc.
Page 3
were financed by Boston Chicken. These two area developers operate a total of
154 Boston Market restaurants in southern California and the northwestern U.S.,
respectively.
The company also said that it does not anticipate any material effect on the
operations of Einstein/Noah Bagel Corp. (ENBX), Boston Chicken's 51 percent-
owned subsidiary, as a result of the filing. ENBX owns and operates retail
bagel stores under the Einstein Bros. Bagels and Noah's New York Bagels trade
names.
In addition, the company announced that its Board of Directors has approved
PricewaterhouseCoopers, L.L.P. as the company's newly-appointed independent
public accountants, effective immediately.
Boston Chicken, Inc. franchises and operates restaurants under the Boston Market
brand name that specialize in fresh, convenient meal solutions, featuring
homestyle entrees, fresh vegetables, sandwiches, salads and side dishes. Boston
Market combines the freshness and quality of traditional home cooking with
convenience and value. Boston Chicken also owns a majority interest in
Einstein/Noah Bagel. Corp.
Certain statements in this news release 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 many of which are 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 such forward-looking statements. In addition, all
forward-looking statements relating to Boston Chicken's efforts to obtain long-
term "exit" financing, an exchange arrangement with its bondholders, a reduction
of its debt levels and other aspects of the plan of reorganization which it
intends to present during the course of the Chapter 11 proceeding, are subject,
among other things, to the formulation by Boston Chicken of an acceptable
reorganization plan, the consent of certain of its creditors and other security
holders to such plan, and bankruptcy court approval of such plan of
reorganization.
TELEVISION FOOTAGE AVAILABLE
- ----------------------------
Comments from Boston Market CEO Mike Jenkins, store footage.
Transmission coordinates:
Monday, Oct. 5, 1998 Time: 10:30 - 10:45 AM ET
C-Band, Galaxy 6, Transponder 9
Audio at 6.2 & 6.8 Mhz
Monday, Oct. 5, 1998 Time: 3:00 - 3:15 PM ET
C-Band, Galaxy 6, Transponder 11
Audio at 6.2 & 6.8 Mhz
-MORE-
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Boston Chicken, Inc.
Page 4
AUDIO FEED AVAILABLE
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Comments from Boston Market CEO Mike Jenkins
Call MediaLink radio news line at 1-800-815-7006
LOGO AVAILABLE
- --------------
Boston Market color logo available via NewsCom, 305-448-8411 or
http://www.newscom.com
- ----------------------
STORE PHOTO AVAILABLE
- ---------------------
Boston Market store photo available on AP PhotoExpress Network 10/5/98 at 10:00
a.m. ET, via NewsCom, 305-448-8411 or http://www.newscom.com
----------------------
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[LOGO OF BOSTON MARKET APPEARS HERE]
Media Contact: Karen Rugen
303-216-5076 -OR- 303-216-5009
Investor Information: 1-800-480-5010
Analysts Only: Melissa Marsden
303-216-5652
COURT APPROVES BOSTON CHICKEN INC.'S INTERIM FINANCING
AND FIRST DAY ORDERS
Golden, Colo. - October 5, 1998 - Boston Chicken, Inc. (Nasdaq: BOST) today
announced that following the company's filing of a voluntary Chapter 11 petition
earlier today, the U.S. Bankruptcy Court for the District of Arizona in Phoenix
has approved the company's request for the interim use of $70 million Debtor-in-
Possession (DIP) financing committed by General Electric Capital Corporation and
Bank of America. Authorization for the full $70 million line will be considered
by the bankruptcy court at its hearing on October 26, 1998.
The court granted Boston Chicken's request to use its cash collateral to
continue operating the business. The court also approved other "first-day
orders" which, among other things, allow Boston Chicken to continue to provide
salaries, wages and benefits to its employees and independent contractors, and
to pay its trade payables without interruption, including vendor bills submitted
prior to the filing, on time and in full.
The company also announced that beginning Tuesday, October 6, 1998, the
company's securities will be identified by a fifth character "Q" appended to its
securities symbols. The company's common stock symbol will change from BOST to
BOSTQ. The ticker symbols for the company's convertible subordinated debentures
will change from BOSTG, BOSTH and BOSTL to BOSGQ, BOSHQ and BOSLQ, respectively.
Boston Chicken, Inc. franchises and operates restaurants under the Boston Market
/R/ brand name that specialize in fresh, convenient meal solutions, featuring
homestyle entrees, fresh vegetables, sandwiches, salads and side dishes. Boston
Market combines the freshness and quality of traditional home cooking with
convenience and value. As of October 5, 1998, there were 965 Boston Market
stores in 36 states and the District of Columbia. Boston Chicken also owns a
majority interest in Einstein/Noah Bagel. Corp., which operates retail bagel
stores primarily under the Einstein Bros./R/ Bagels and Noah's New York
Bagels/R/ brand names.
Certain statements in this news release 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 many of which are 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 such forward-looking statements. In addition, all
forward-looking statements relating to Boston Chicken's efforts to obtain long-
term "exit" financing, an
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Boston Chicken, Inc.
Page 2
exchange arrangement with its bondholders, a reduction of its debt levels and
other aspects of the plan of reorganization which it intends to present during
the course of the Chapter 11 proceeding, are subject, among other things, to the
formulation by Boston Chicken of an acceptable reorganization plan, the consent
of certain of its creditors and other security holders to such plan, and
bankruptcy court approval of such plan of reorganization.
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