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 earliest event reported) July 29, 1998
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New World Coffee & Bagels, Inc.
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(Exact name of registrant as specified in charter)
Delaware 0-27148 13-3690261
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
379 West Broadway,New York, New York 11746
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 343-0552
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(Former name or former address, if changed since last report.)
Item 5. Other Events.
On July 29, 1998, the Registrant issued a press release
(the "Press Release") annexed as an exhibit hereto. The Press
Release indicates that the Registrant entered into an Acquisition
Agreement with Manhattan Bagel Company, Inc., Debtor in
Possession, a New Jersey corporation, ("MBC"). As indicated in
said Exhibit, the transactions contemplated by the Acquisition
Agreement are subject to Bankruptcy Court approval,which may
involve a modification of the terms of the Acquisition Agreement.
The Registrant intends to file the Acquisition Agreement
with the Bankruptcy Court (United States Bankruptcy Court for the
District of New Jersey - Newark Division)in connection with a
motion for approval of several portions of the Acquisition
Agreement, and also intends to file, together with MBC, a
disclosure statement relating to the Acquisition Agreement, which
are the initial steps in the process by which the approval of the
Bankruptcy Court is sought. There can be no assurance that the
transactions contemplated by the Acquisition Agreement will be
consummated, although the Registrant believes that same are
likely to occur.
Item 7. Financial Statements and Exhibits.
Exhibit 21.1 Press Release issued July 29, 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.
Dated: August 12, 1998
NEW WORLD COFFEE & BAGELS, INC.
By: /s/ R. RAMIN KAMFAR
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President and Chief Executive Officer
FOR IMMEDIATE RELEASE
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COMPANY CONTACT: PRESS CONTACT:
Ramin Kamfar Jill Schmidt 847/291-8421, ext. 227
212/343-0552 ext. 21 S&S Public Relations
[email protected] [email protected]
NEW WORLD COFFEE TO ACQUIRE MANHATTAN BAGEL
Acquisition will create the U.S. market's largest coffee/bagel
franchisor
NEW YORK, N.Y. (July 29, 1998) -- New World Coffee & Bagels, Inc.
(NASDAQ: NWCI) today announced that it has signed an agreement to
acquire Manhattan Bagel Company (NASDAQ: BGLSQ), the bagel
manufacturer and franchisor that filed for Chapter 11 protection
last November. The agreement covers the acquisition of Manhattan
Bagel's approximately 310 store franchise system, two bagel dough
manufacturing plants and corporate operations. Both chains would
retain their individual identities while consolidating their
corporate infrastructure.
Pro forma systemwide sales should approach $150 million from
the approximately 350 franchised and company-owned Manhattan Bagel
and New World stores. Manhattan Bagel currently franchises,
licenses or operates approximately 310 units, while New World
franchises or operates 43 units.
Pro forma revenues for the combined entity should exceed $45
million, including retail store sales, sale of bagel dough, cream
cheese and coffee beans to franchisees, and franchise royalty and
fee income.
The combined entity would have a major market presence in the
Northeast, the Southeast and in California. Existing bagel dough
plants (in Eatontown, NJ and Los Angeles, CA), and a coffee plant
(in Branford, CT), are expected to be capable of supplying stores
on both coasts.
"This combination is a natural fit strategically and
operationally," said Ramin Kamfar, New World's CEO and President.
"Strategically, Manhattan Bagel has an award-winning bagel product
which is a perfect complement for our award-winning coffee. In
addition, our store base complements Manhattan's strength in the
Northeast to create a leading presence in the area. Operationally,
our strength in systems and the depth of our management team are a
match for Manhattan's needs in order to grow its business."
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"For Manhattan Bagel franchisees, the combination presents an
opportunity to increase sales by featuring New World's highly-acclaimed
branded coffee and adding iced coffees, frozen coffee
drinks and espresso-based beverages to the menu," Mr. Kamfar
continued. "Manhattan bagel stores currently average approximately
10% of their sales in coffee where the comparable figure for New
World's bagel stores is close to 50%. These product lines would be
supported by a full range of merchandising and marketing programs."
"The financial synergies of this transaction are expected to
be significant," said Jerry Novack, New World's Chief Financial
Officer. "The benefits of maximizing plant capacity for both
parties, cross selling of coffee and bagel products and
consolidation of general and administrative overhead should be
substantial. We will work with Manhattan Bagel to implement a
state-of-the-art computer system that we expect will help enhance
the ability to track and improve store profitability. The
transaction should prove strongly accretive to our earnings."
Under the acquisition, which is subject to necessary
bankruptcy court approvals, New World would provide up to $3.5
million for Manhattan Bagel's secured creditors, provide $11.5
million for Manhattan Bagel's unsecured creditors, and assume up to
$5.0 million in additional liabilities. No value will be provided
to Manhattan Bagel equity holders. The transaction will be
primarily financed with cash and debt. The two companies are
currently working on a plan of reorganization that would enable
Manhattan Bagel to emerge from Chapter 11 bankruptcy protection.
Founded in 1993, New World Coffee & Bagels currently owns,
operates and franchises stores in New York, New Jersey,
Pennsylvania, Connecticut, Maryland, Florida and Germany. The
Company's stores are the first in the industry to combine
fresh-brewed coffee and fresh-baked bagels under one roof.
This two-in-one concept allows New World Coffee & Bagel stores to generate
continuous traffic for breakfast, lunch, and between meals,
maximizing store sales.
Manhattan Bagel Company opened its first store in 1987, began
franchising in 1989 and launched manufacturing operations in 1991.
The company filed for Chapter 11 protection in November 1997. The
company currently franchises, licenses or operates approximately
310 stores in 18 states and Washington, D.C.
Certain statements in this release constitute forward-looking
statements or statements which may be deemed or construed to be
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The words "forecast,"
"estimate," "project," "intend," "expect," "should," "believe,"
and similar expressions are intended to identify forward-looking
statements. These forward-looking statements involve and are
subject to known and unknown risks, uncertainties and other
factors which could cause the Company's actual results,
performance (financial or operating)
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or achievements to differ from the future results, performance
(financial or operating), achievements expressed or implied by
such forward-looking statements. In addition, the terms of the
acquisition are subject to change in advance of approval of the
definitive plan of reorganization, and the effectiveness of the
plan of reorganization is subject to, among other things, the
Bankruptcy Court's prior approval of the disclosure statement and
of such plan. Completion of this process may take several months.
The above factors are more fully discussed in the Company's SEC
filings.
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