SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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): JANUARY 7, 1998
ADVANTICA RESTAURANT GROUP, INC.
(Exact Name of registrant as specified in its charter)
DELAWARE 0-18051 13-3487402
(State or other jurisdiction (Commission File No.) (I.R.S. Employer Identifi-
of incorporation) cation No.)
203 EAST MAIN STREET, SPARTANBURG, SC 29319-9966
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 597-8000
Former name or former address, if changed
since last report: FLAGSTAR COMPANIES, INC.
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Pursuant to the Joint Plan described and defined in Item 5 below, as of
January 7, 1998, the Joint Plan's effective date (the "Effective Date"), the
Registrant's existing equity securities were cancelled and new common stock of
the Registrant was authorized and issued to holders of certain classes of debt
securities of the Registrant in exchange for such debt securities. As a result
of such exchange, the classes of debt security holders described below in Item
5, acquired control of the Registrant while former holders of the Registrant's
equity securities relinquished control of the Registrant as of the Effective
Date.
ITEM 5. OTHER EVENTS
As of the Effective Date, the Registrant closed certain transactions in
connection with the Joint Plan of Reorganization (the "Joint Plan") of Flagstar
Companies, Inc. ("FCI") and its wholly-owned subsidiary, Flagstar Corporation
("Flagstar"), dated July 11, 1997 (the "Petition Date"), amended November 7,
1997 and confirmed by order of the United States Bankruptcy Court for the
District of South Carolina entered November 12, 1997, pursuant to Chapter 11 of
Title 11 of the United States Code. In conjunction with such closing, the Joint
Plan became effective.
Material features of the Joint Plan are as follows:
(i) on the Effective Date, Flagstar merged with and into FCI. FCI was
the surviving corporation in the merger and changed its name, as of the
Effective Date, to Advantica Restaurant Group, Inc.
("Advantica").
(ii) general unsecured claims of FCI and Flagstar remained
unimpaired.
(iii) Flagstar's 10 7/8% Senior Notes due 2002 (the "10 7/8% Senior
Notes" and 10 3/4% Senior Notes due 2001 (the "10 3/4% Senior Notes"
and together with the 10 7/8% Senior Notes the "Old Senior Notes") were
cancelled, extinguished and retired as of the Effective Date. Each
holder of the 10 7/8% Senior Notes and 10 3/4% Senior Notes, in
exchange for such Old Senior Notes, is entitled to receive $1,065.55
and $1,087.49, respectively, in principal amount (representing 100% of
the principal of and accrued interest on the Old Senior Notes through
the Effective Date) of Advantica's 11 1/4% Senior Notes due 2008 (the
"Advantica Senior Notes"), per $1,000 principal amount of Old Senior
Notes.
(iv) Flagstar's 11.25% Senior Subordinated Debentures due 2004 (the
"11.25% Debentures") and 11 3/8% Senior Subordinated Debentures due
2003 (the "11 3/8% Debentures" and together with the 11.25% Debentures,
the "Senior Subordinated Debentures") were cancelled, extinguished and
retired as of the Effective Date. Each holder of
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the 11.25% Debentures and the 11 3/8% Debentures, in exchange for the
unpaid principal and accrued interest amounts of such Senior
Subordinated Debentures, is entitled to receive, 44.986 and 45.614
shares, respectively, of Advantica's common stock, par value $0.01 per
share (the "Advantica Common Stock"), per $1,000 principal amount of
the Senior Subordinated Debentures.
(v) Flagstar's 10% Convertible Junior Subordinated Debentures due 2014
(the "10% Convertible Debentures") were cancelled, extinguished and
retired as of the Effective Date. Each holder of the 10% Convertible
Debentures, in exchange for the unpaid principal and accrued interest
amounts of the 10% Convertible Debentures, is entitled to receive,
both (1) 18.134 shares of Advantica Common Stock and (2) warrants to
purchase 40.298613 shares of Advantica Common Stock (the "Advantica
Common Stock Warrants"), per $1,000 principal amount of the 10%
Convertible Debentures.
(vi) Flagstar Companies, Inc. $2.25 Series A Cumulative Convertible
Exchangeable Preferred Stock and FCI's $.50 par value common stock were
cancelled, extinguished and retired as of the Effective Date, with the
holders of such securities receiving or retaining no property under the
Joint Plan.
(vii) a new board of directors of Advantica was elected and appointed
and began service as of the Effective Date.
(viii) as of the Effective Date, Advantica has (1) 100,000,000
authorized shares of $.01 par value common stock, 40,000,000 shares of
which are issued and outstanding, and (2) 25,000,000 authorized shares
of preferred stock. Ten percent (10%) of the Advantica Common Stock, on
a fully diluted basis, will be reserved for a new management stock
option program, in addition to 4,000,000 shares of Advantica Common
Stock reserved for issuance upon the exercise of Advantica Common Stock
Warrants. Such Warrants expire January 7, 2005.
Also, pursuant to the terms of the Joint Plan, on the Effective Date,
the Registrant entered into the following material agreements:
(i) A five-year, $200 million senior secured revolving credit facility
(the "Exit Facility") between certain subsidiaries of the Registrant,
as borrowers, the Registrant, as guarantor, and a syndicate of
financial institutions led by The Chase Manhattan Bank ("Chase"), to be
used for working capital and general corporate purposes. The Exit
Facility replaces the $200 million debtor-in-possession facility (the
"DIP Facility") between FCI, Flagstar, certain subsidiaries of
Flagstar, and Chase utilized during the Chapter 11 proceedings.
(ii) An Indenture, between Advantica and First Trust National
Association, as Trustee, governing the issuance of the Advantica
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Senior Notes.
(iii) A Warrant Agreement, between Advantica and Continental Stock
Transfer and Trust Company, governing the terms and the issuance of the
Advantica Common Stock Warrants.
(iv) A Registration Rights Agreement (the "Registration Rights
Agreement") with each Holder of 10% or more of the Advantica Common
Stock (a "Potentially Affiliated Holder") provides the Potentially
Affiliated Holders with certain shelf, demand and "piggy-back"
registration rights.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
Listed below are all Exhibits filed as a part of this current report.
Certain of the Exhibits to this current report, indicated by an asterisk, are
hereby incorporated by reference to other documents on file with the Commission,
to be a part hereof as of their respective dates.
Exhibit Number Description
*2.1 Joint Plan of Reorganization of Flagstar
Companies, Inc. and Flagstar, amended
November 7, 1997, and as confirmed by order
of the United States Bankruptcy Court for
the District of South Carolina filed
November 12, 1997 (incorporated by reference
to Exhibit 2.1 to Form 8-K, dated
November 12, 1997).
4.1 Indenture, dated as of January 7, 1998,
between Advantica and First Trust National
Association, as Trustee, relating to the
Advantica 11 1/4% Senior Notes Due 2008.
*4.2 Warrant Agreement, dated January 7, 1998,
between Advantica and Continental Stock
Transfer and Trust Company (incorporated by
reference to Exhibit 10.1 to Form 8-A, filed
January 7, 1998 with respect to the
Registrant's Common Stock Warrants).
*4.3 Registration Rights Agreement, dated as of
January 7, 1998, among Advantica and each
holder of registrable securities named
therein (incorporated by reference to Exhibit
10.1 to Form 8-A, filed January 7, 1998 with
respect to the Registrant's Common Stock).
10.1 Credit Agreement, dated January 7, 1998,
among Denny's, Inc., El Pollo Loco, Inc.,
Flagstar
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Enterprises, Inc., Flagstar Systems, Inc.,
and Quincy's Restaurants, Inc., as Borrowers,
Advantica, as a Guarantor, the Lenders named
therein, and The Chase Manhattan Bank, as
administrative agent.
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.
Advantica Restaurant Group, Inc.
By: /s/ Rhonda J. Parish
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Name: Rhonda J. Parish
Title: Senior Vice President, General
Counsel and Secretary
Date: January 15, 1998
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