SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): June 28, 2000
American Restaurant Group, Inc.
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-48183 33-0193602
- -------------------- ------------------- --------------------
(State of other (Commission file number) (IRS employer
jurisdiction of identification
incorporation number)
4410 El Camino Real, Suite 201
Los Altos, California 94022
- ---------------------------------------- -----------
(Address of principal executive offices) (Zip code)
(650) 949-6400
------------------------------
(Registrant's telephone number, including area code)
450 Newport Center Drive
Newport Beach, California 92660
---------------------------------------------------------------
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On June 28, 2000, American Restaurant Group, Inc., a
Delaware corporation (the "Company") sold all of the outstanding stock of
four (4) of its wholly owned subsidiaries, Grandy's, Inc., Spoons Restaurants,
Inc., Spectrum Foods, Inc. and Local Favorite, Inc. (collectively, the
"Non-Black Angus Subsidiaries"), to NBACo, Inc., a Delaware corporation
("NBACo"), pursuant to a Stock Purchase Agreement, dated as of May 9, 2000
(as amended from time to time, the "Stock Purchase Agreement"), between the
Company and NBACo. Pursuant to the terms of the Stock Purchase Agreement, the
Company transferred all of the outstanding stock of the Non-Black Angus
Subsidiaries, the lease for its corporate headquarters (the "Headquarters
Lease") in Newport Beach, California, certain assets used at such
headquarters and various intellectual property rights associated with the
Non-Black Angus Subsidiaries and assumed (i) certain leases (the "Excluded
Leases") for closed units of the Non-Black Angus Subsidiaries and (ii)
certain other liabilities of the Non-Black Angus Subsidiaries, including,
without limitation, accounts payable, accrued sales tax, accrued insurance
premiums and liabilities to third parties covered under the Company's
insurance policies but only to the extent that the Company receives payments
under such insurance policies (the "Transaction"). Pursuant to the terms of
the Stock Purchase Agreement, the Company (i) received $17,000,000 in cash in
consideration for the Transaction on June 28, 2000, (ii) paid $1,300,000 to
NBACo on or before July 11 to cover various payroll expenses of the Non-Black
Angus Subsidiaries and (iii) retained approximately $7.1 million in cash
proceeds from the sale of certain assets of the Non-Black Angus Subsidiaries
since March 29, 1999 (including, without limitation, the proceeds from sales
of Company-owned Grandy's units to franchisees).
NBACo is wholly owned by Anwar S. Soliman ("Soliman"), who
prior to the transaction served as Chairman of the Board of Directors and
Chief Executive Officer of the Company. Soliman also serves as a director and
officer of NBACo. In conjunction with the Transaction, Soliman (i) received
$182,512 (an amount equal to his salary for 90 days) and (ii) resigned all
positions he held with the Company and its subsidiaries other than the
Non-Black Angus Subsidiaries except as a director of the Company. Soliman
remains the largest shareholder of American Restaurant Group Holdings, Inc.
("Holdings"), the parent of the Company. Pursuant to certain voting trust
agreements and his own direct ownership of the common stock of the Company,
Soliman will effectively continue to control the voting of all of the common
stock of the Company (without giving effect to any outstanding warrants),
subject to a securityholders agreement which gives Soliman the right to
appoint only two out of five members of the Board of Directors of the Company.
In addition, Ken A. Di Lillo ("Di Lillo"), Vice
President-Finance, Treasurer and Assistant Secretary of the Company prior to the
closing of the Transaction, assisted Soliman in negotiating the Transaction on
behalf of NBACo. At the closing of the Transaction, Di Lillo resigned all of his
positions with the Company and its subsidiaries other than the Non-Black Angus
Subsidiaries. Di Lillo serves as a director and an officer of NBACo.
Ralph S. Roberts ("Roberts"), President and Chief Operating
Officer of the Company, William J. McCaffrey, Jr. ("McCaffrey"), Vice
President of the Company, and Patrick J. Kelvie ("Kelvie"), Vice President
and Secretary of the Company, will all remain with the Company in their
current positions. None of Roberts, McCaffrey or Kelvie is an officer of,
director of or shareholder in NBACo.
The consideration for the sale of assets was determined by
arm's length negotiations among the parties.
The Transaction was unanimously approved by a special
committee of directors of the Company with no pecuniary interest in NBACo (the
"Special Committee"). Prior to executing the Stock Purchase Agreement, the
Special Committee received an opinion from the investment banking firm of
Jefferies & Company, Inc. that the Transaction was fair from a financial point
of view to (i) the Company, (ii) the holders of the Company's common stock,
(iii) the holders of the Company's 12% Series B Senior Pay-In-Kind Exchangeable
Preferred Stock
-2-
and (iv) the holders of the Company's 11 1/2% Senior Subordinated Notes due 2003
(the "Senior Secured Notes").
The proceeds of the Transaction will be applied by the Company
to repay a portion of the Senior Secured Notes and/or for general corporate
purposes.
The Stock Purchase Agreement is attached as Exhibit 2.1, and
Amendment No. 1, dated as of June 26, 2000, to the Stock Purchase Agreement is
attached as Exhibit 2.2. Both the Stock Purchase Agreement and
Amendment No. 1 thereto are incorporated herein by reference.
Item 5. Other Events
In connection with the disposition of the Non-Black Angus
Subsidiaries by the Company, the Company and certain of its subsidiaries entered
into the First Amendment (the "First Amendment") to its Revolving Credit
Agreement dated as of February 25, 1998 (the "Revolving Credit Agreement").
Pursuant to the terms of the First Amendment, among other things, (a) the
commitment of the lenders under the Revolving Credit Agreement was reduced from
$15,000,000 to $12,000,000, (b) the maximum amount available for issuance of
letters of credit was reduced from $10,000,000 to $7,000,000, (c) the maturity
date was extended from February 25, 2000 until June 30, 2002, (d) certain
financial covenants were amended and (e) the Non-Black Angus Subsidiaries were
released as Borrowers.
The Revolving Credit Agreement is attached as Exhibit 10.3,
and the First Amendment is attached as Exhibit 10.4. Both the Revolving
Credit Agreement and the First Amendment are incorporated herein by reference.
The Company also formed a new subsidiary, ARG Terra, Inc., a
Delaware corporation ("ARG Terra"), to hold the Excluded Leases. ARG Terra
became a party to the Revolving Credit Agreement by executing a joinder
agreement (the "Joinder Agreement") and to the indenture under which the Senior
Secured Notes were issued pursuant to a supplemental indenture (the "First
Supplemental Indenture").
The Joinder Agreement is attached as Exhibit 10.5, and the
First Supplemental Indenture is attached as Exhibit 4.9. Both the Joinder
Agreement and the First Supplemental Indenture are incorporated herein by
reference.
At the closing of the Transaction, Soliman not only resigned
as Chief Executive Officer and Chairman of the Board of Directors of the Company
but also agreed to terminate the Amended and Restated Employment Agreement,
dated as of December 14, 1994, between Soliman and the Company, which had been
filed as Exhibit 10.1 to the Company's registration statement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
Not applicable.
-3-
(b) Pro Forma Financial Information
The required Pro Forma financial statements are
attached as Exhibit 99.1.
(c) Exhibits
A list of exhibits included as part of this report is set
forth in the Exhibit Index which immediately precedes such exhibits and is
incorporated herein by reference.
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 thereunto duly authorized.
AMERICAN RESTAURANT GROUP, INC.
Date: July 13, 2000 /s/ Ralph S. Roberts
-------------------------------------
Ralph S. Roberts
President and Chief Operating Officer
-4-
EXHIBIT INDEX
2.1 Stock Purchase Agreement, dated as of May 9, 2000 between American
Restaurant Group, Inc. and NBACo, Inc.*
2.2 Amendment No. 1, dated as of June 26, 2000, to Stock Purchase
Agreement, dated as of May 9, 2000, between American Restaurant Group,
Inc. and NBACo, Inc.*
4.9 First Supplemental Indenture, dated as June 28, 2000, to Indenture,
dated as of February 25, 1998 between American Restaurant Group, Inc.
and U.S. Trust Company, National Association (formerly known as U.S.
Trust Company of California, N.A.)*
10.3 Revolving Credit Agreement, dated as of February 25, 1998, by and among
American Restaurant Group, Inc., the subsidiaries of American
Restaurant Group, Inc. listed as Borrowers therein, Fleet National Bank
(formerly known as BankBoston, N.A.), as Agent, and the Banks listed on
Schedule I thereto.*
10.4 First Amendment, dated as of June 28, 2000, to Revolving Credit
Agreement, dated as of February 25, 1998, by and among American
Restaurant Group, Inc., the subsidiaries of American Restaurant Group,
Inc. listed as Borrowers therein, Fleet National Bank (formerly known
as BankBoston, N.A.), as Agent, and the Banks listed on Schedule I
thereto.*
10.5 Joinder Agreement, dated as of June 28, 2000 between ARG Terra, Inc.
and Fleet National Bank, as Agent.*
21.1 Subsidiaries of the Company.*
99.1 Pro Forma Financial Information.*
- ----------
* Incorporated by reference to the Registrant's Current Report on Form 8-K
dated June 28, 2000 filed with the Securities and Exchange Commission on
July 12, 2000.
-5-