HOUSTON, July 19, 2021 /PRNewswire/ -- Luby's, Inc. (NYSE:
LUB) ("Luby's") which is in the process of monetizing its assets
for the benefit of its shareholders, announced today its financial
results for the third quarter ended June 2,
2021.
Financial Results
Liquidation Basis of Accounting
As a result of Luby's shareholder approval of its plan of
liquidation on November 17, 2020,
effective November 19, 2020, in
accordance with Generally Accepted Accounting Principles ("GAAP"),
the Company began reporting its financial results on the
liquidation basis of accounting. The liquidation basis of
accounting requires, among other things, that management estimates
net sales proceeds on an undiscounted basis, as well as includes in
the Company's assets and liabilities the undiscounted estimate of
future revenues and expenses through the end of the
liquidation. Based on the liquidation basis of accounting,
the net assets in liquidation at June 2,
2021 are currently estimated to result in future liquidating
distributions of approximately $4.13
per common share based on the number of common shares outstanding
on that date. This amount represents an increase of $0.15 per share compared to last quarter's
estimate owing primarily to actual realization from completed real
estate transactions as well as achieving better operating results
than previously forecasted. This estimate of future
liquidating distributions includes projections of sales proceeds
and net operating revenues to be received and costs and expenses to
be incurred, including costs to dispose of the Company's assets to
complete the plan of liquidation which is currently projected to be
completed by June 30, 2022.
There is inherent uncertainty with these projections, and
accordingly, these projections could change materially based on a
number of factors both within and outside of Luby's control. There
can be no assurance that these estimated values will be
realized. Such amounts should not be taken as an indication
of the timing or the amount of future distributions or our actual
dissolution.
The current estimate of net assets in liquidation at
June 2, 2021 has been estimated based
on undiscounted cash flow projections and assumes a final
liquidation on June 30, 2022 even
though the actual timing of the sale of the Company's operating
businesses and real estate holdings cannot be determined with any
specificity at this time. As such, the final liquidation of
the Company is subject to future events and uncertainties.
Liabilities are carried at their contractual amounts due as
adjusted for the impact of timing of the planned liquidation.
It is not possible to predict with certainty the timing or
aggregate amount which may ultimately be distributed to our
shareholders and no assurance can be given that the distributions
will equal or exceed the estimate presented in this release.
Recent Company Announcements
- June 21, 2021: Luby's, Inc. Signs
Agreement to Sell Luby's Cafeteria Restaurant Operations to
Affiliate of Calvin Gin as Part of
Execution of Company's Monetization Plan (Real Estate to be Sold
Separately)
The Company has entered into an agreement to sell the Luby's
Cafeteria restaurant business to a newly formed affiliate of
Calvin Gin. The purchase by the Gin
affiliate (to be renamed Luby's Restaurants Corporation following
closing of the transaction) will include 32 of the existing
locations of Luby's restaurants, all in Texas, and ownership of the Luby's Cafeteria
brand. The acquisition of the Luby's cafeterias business does not
include any of the real estate owned by Luby's, nor does it include
any of the Company's Fuddruckers operations or the Company's
Culinary Contract Service business. The structure of the
transaction will allow Luby's to sell its real estate related to
its cafeteria restaurant business to third parties and realize the
related value for its shareholders. It is currently anticipated,
following the closing of the transaction, that almost all employees
at the 32 involved locations will be offered positions by the
purchaser to remain at those store locations, employment that will
likely total over 1,000 associates. It is currently anticipated
that the Luby's Cafeteria operations sale transaction could provide
Luby's with approximately $28.7
million of value (all but a nominal amount of which will be
derived from the purchaser's assumption of Luby's liabilities and
the purchaser's issuance of notes to Luby's). There can be no
assurance that the Company will realize or receive the full value
of such consideration.
- June 17, 2021: Luby's, Inc. Signs
Agreement to Sell the Fuddruckers Franchise Business to Affiliate
of Nicholas Perkins as Part of
Execution of Company's Monetization Plan
The purchase by the Perkins affiliate, Black Titan Franchise
Systems LLC, encompasses the master ownership of the Fuddruckers
brand. The Fuddruckers brand currently has 92 locations operating
in the United States, including 13
locations operated by affiliates of Mr. Perkins. It is currently
anticipated the Fuddruckers franchise brand sale transaction could
provide Luby's, Inc. with approximately $18.5 million of value (most of which will be
derived from the purchaser's issuance of a note to Luby's and
assumption of certain liabilities). There can be no assurance that
the Company will realize or receive the full value of such
consideration.
During fiscal year 2021 through July 19,
2021, we have closed on the sale of seven properties for
total net proceeds of approximately $16.9
million. Four of these seven properties were sold in
June 2021 for total net proceeds of
approximately $9.1
million. Proceeds from property sales have been used
primarily to reduce our outstanding debt balance.
The Company currently operates 55 Luby's Cafeterias and nine
Fuddruckers, as well as Culinary Contract Services at 27 locations,
while pursuing sales of these businesses as part of its liquidation
plan. Operationally, it is business as usual as we progress through
the transition of these iconic brands to their new owners.
About Luby's
Luby's, Inc. (NYSE: LUB) previously announced its plan of
liquidation and dissolution, which was approved by its shareholders
on November 17, 2020. In June 2021, Luby's, Inc. also previously announced
that it has entered into an agreement to sell both its restaurant
brands, Luby's Cafeterias and Fuddruckers. In addition, Luby's is
actively seeking buyers for its Luby's Culinary Contract Services
business segment, which provides food service management to sites
consisting of healthcare facilities, corporate dining locations,
sports stadiums, as well as sales of certain frozen Luby's entrees
through retail grocery stores. Luby's also owns real estate assets
related to its operations, for which it is also in the process of
actively seeking buyers.
Forward Looking Statements
This press release contains statements that are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements
contained in this press release, other than statements of
historical fact, are "forward-looking statements" for purposes of
these provisions, including the statements regarding sales of
assets, effects of the Company's Liquidation and Dissolution Plan
(the "Plan"), expected value or proceeds attributable to the sale
of assets, and expected proceeds to be distributed to stockholders
or the timing thereof. Luby's cautions readers that various factors
could cause its actual financial and operational results to differ
materially from those indicated by forward-looking statements made
from time-to-time in news releases, reports, proxy statements,
registration statements, and other written communications, as well
as oral statements made from time to time by representatives of
Luby's. The following factors, as well as any other cautionary
language included in this press release, provide examples of risks,
uncertainties and events that may cause Luby's actual results to
differ materially from the expectations Luby's describes in such
forward-looking statements: general business and economic
conditions; the effects of the COVID-19 pandemic; the impact of
competition; our operating initiatives; fluctuations in the costs
of commodities, including beef, poultry, seafood, dairy, cheese and
produce; increases in utility costs, including the costs of natural
gas and other energy supplies; changes in the availability and cost
of labor; the seasonality of Luby's business; changes in
governmental regulations, including changes in minimum wages; the
effects of inflation; the availability of credit; unfavorable
publicity relating to operations, including publicity concerning
food quality, illness or other health concerns or labor relations;
the continued service of key management personnel; and other risks
and uncertainties disclosed in Luby's annual reports on Form 10- K
and quarterly reports on Form 10-Q, including information regarding
the risks, uncertainties and other factors relating to the Plan,
the expected net proceeds from the sale of assets, and expected
proceeds to be distributed to stockholders.
For additional information contact:
John Garilli, Interim CEO
(617) 570-4600
LInvestors@lubys.com
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SOURCE Luby's, Inc.