This might help explain the recent up action ... biff
Boston Chicken Exploring Sale, Restating 1997 Results
Washington, March 26 (Bloomberg) -- Boston Chicken Inc. asked its investment bank to explore a sale of the restaurant chain, and said it will restate 1997 and interim 1998 financial results.
The Golden, Colorado-based company, which is operating under bankruptcy court protection, said in a regulatory filing that BT Alex. Brown Inc. will help Boston Chicken ''explore strategic alternatives.'' Boston Chicken had hired the Bankers Trust Corp. unit in February to help restructure its debt.
Now, BT Alex. Brown is preparing confidential information ''that would help a potential investor consider if they might make an investment in, or an offer for, the company,'' Boston Chicken spokeswoman Karen Rugen said.
Boston Chicken's many options include selling part or all of company, she said: ''It's not unusual for company in (Chapter) 11 to at least consider that option.''
In a filing with the U.S. Securities and Exchange Commission, Boston Chicken also said it will restate 1997 and interim 1998 financial results -- increasing its 1997 net loss -- because new auditors found the company's didn't take sufficient charges against income for loans that restaurant franchisees weren't able to repay to the company.
PricewaterhouseCoopers LLP, hired last October around the time Boston Chicken filed for Chapter 11 bankruptcy protection, will re-audit 1997 results, Boston Chicken said in the filing.
The company's work in untangling 1997 results is complicated by a change in management, as well as auditors, since then. Accounting decisions for the year were made under the company's founders and former co-chairmen -- Saad Nadhir and Scott Beck, who resigned last May -- and were audited by Arthur Andersen LLP.
Boston Chicken's new managers, under Chairman and Chief Executive J. Michael Jenkins, has discussed the prior accounting decisions with the company's former executives, spokeswoman Rugen confirmed, though she declined to comment on the conversation.
Boston Chicken couldn't say when the audit will be completed. Meanwhile, Rugen said, the company won't meet its March 29 deadline to file its 10-K annual report.
The re-audit and restatements ''have absolutely nothing to with current operations'' or the company's cash position and debtor-in-possession financing, Rugen said.
Boston Chicken said it couldn't provide evidence needed by PricewaterhouseCoopers to sign off on 1998 results. The company's spokeswoman said the accountant preliminarily found the company should have taken a bigger charge for bad loans in the fourth quarter of 1997 than the $128 million the company recorded.
The company recorded $365.5 million total charges in the fourth quarter 1997 and first three quarters of 1998 as ''loan loss reserves'' against about $800 million of loans made to franchisees, the spokeswoman said. PricewaterhouseCoopers will re- audit those allocations. Some charges taken during 1998 could be shifted to 1997, Rugen added.
Boston Chicken reported a $223.9 million loss for 1997 on $462.4 million of revenue.
The company's shares, which peaked at 41 1/2 in December 1996, rose 6 cents to close at 65 cents.
17:22:05 03/26/1999
For more stories from Bloomberg News, click here.
(C) Copyright 1999 Bloomberg L.P.
Any redistribution of Bloomberg content, including by framing or similar means, is expressly prohibited without the prior written consent of Bloomberg L.P. Any reference to the material must be properly attributed to Bloomberg News.
The information herein was obtained from sources which Bloomberg L.P. and its suppliers believe reliable, but they do not guarantee its accuracy. Neither the information, nor any opinion expressed, constitutes a solicitation of the purchase or sale of any securities or commodities.(C) Copyright 1999 Bloomberg L.P. BLOOMBERG, Bloomberg News, Bloomberg Financial Markets, Bloomberg Television, Bloomberg News Radio are trademarks, tradenames and service marks of Bloomberg L.P. |
