Analysis requested - there have been two interesting announcements this week: (1) it was announced that the Bankruptcy Court had okayed its marketing deal with Heinz (a good thing - stock reacted by going up about 20%) but (2)today, in the second press release listed below, the company announced they had formally started the bidding process with the Bankruptcy Court for a friendly takeover of the company (to me - very solid and positive news) ... but the stock took a small 8% dive ... I am not sure why? ... In the press release, it was mentioned that the company would be liable for charges to the acquiring companies whose offers were rebuffed ... is that what caused the negative reaction to what I saw as a very positive announcement? Just am curious to anyone's thoughts on this bit of financial news ... thanks, biff
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Boston Chicken Seeks Bankruptcy Court Approval of Sale Procedures
GOLDEN, Colo., June 23 /PRNewswire/ -- Boston Chicken, Inc. (OTC Bulletin Board: BOSTQ) has filed a motion asking the U.S. Bankruptcy Court, District of Arizona, to approve procedures for submission to the company of binding purchase proposals from potential buyers. The motion, filed June 21, proposes dates for bid submission and negotiation, and selection of a purchaser for Boston Chicken. The company filed its voluntary petition for Chapter 11 bankruptcy protection in the same court on October 5, 1998.
(Photo: newscom.com )
"We have been working with our financial advisors to develop the best way to successfully emerge from Chapter 11. As a result of discussions with our advisors, senior lenders and potential buyers, we decided it was time to institute a formal bid procedure," said J. Michael Jenkins, chairman, president and chief executive officer of Boston Chicken.
In addition to setting deadline dates for selecting a buyer and filing a reorganization plan, the bid procedures include limited expense recovery for unsuccessful bidders, and payment of a "break-up fee" to the plan sponsor in the event an alternative buyer is chosen.
The motion submitted to the Bankruptcy Court follows the Court's approval of a license agreement between Boston Chicken and H.J. Heinz Company (NYSE: HNZ). The agreement enables Heinz to manufacture and sell packaged foods to the retail trade under the Boston Market(R) trademark.
"The approval of the Heinz agreement and the motion to formalize the bid procedure are very solid steps forward in our efforts to reorganize the company under the protection of the bankruptcy court," said Jenkins.
Boston Chicken, Inc. operates and franchises restaurants under the Boston Market brand name that specialize in fresh, convenient meals, featuring homestyle entrees, fresh vegetables, sandwiches, salads and side dishes. There are 865 Boston Market restaurants in 33 states and the District of Columbia. Information on Boston Chicken and Boston Market is available at www.boston-market.com.
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 filings with the Securities and Exchange Commission (the "Commission"), which may cause the actual results, performance or achievements of the Company and its stores to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. The Company's success generally is dependent upon, among other things, approval by the Bankruptcy Court of various Company plans and initiatives and an acceptable reorganization plan.
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