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Microcap & Penny Stocks : KAFE (Country Star Restaurants) -- Ignore unavailable to you. Want to Upgrade?

To: ChrisJP who wrote (578)	1/22/1998 10:40:00 AM
From: Richard Rose	Respond to of 876

Hey guys I'm back from Asia. Looks like CAFE went through the dumper while I was gone. I naively though I'd be able to keep up on things while I was gone for so long. Silly me, it did not work. Sold most of my CAFE for a loss from a internet lounge at the Singapore airport in early December. Was real disoriented. Kept at tad. These apparent slippery maneuvers, if that is what they are, are at least entertaining to try and understand. As for distressed SPECULATION, which many of us have been toying with here and elsewhere, I'm concerned the game has become much more complicated and risky (more risky than previous high risk) with the NASDAQ belt tightening - listing requirements/delisting. Trying to play this game on the BB is just not the same animal. Whether it will shift there over time, don't know? Any thoughts on the matter from fellow vultures and speculators? Richard

To: ChrisJP who wrote (578)	1/22/1998 12:37:00 PM
From: Richard Rose	Read Replies (1) \| Respond to of 876

I've read the 8k. Here is my analysis Actually all I read was "Item 9 - Other events" which is essentially a summary of the deal and situation. The full contracts, reproduced below Item 9, contain the details. There could be some key elements in the contracts not mentioned in the summary. CAFE was not the "Restaurant Operator" but owned a majority stake in the Operator. In other words, a corporation separate from CAFE -actually a LLC was set up to own and run the place. A slick move if trouble arises. NevStar had a piece of the operator and was the Landlord. This is often done for construction allowances with landlords. Technically, the restaurant operator, not CAFE owed 200k in back rent. NevStar served notice to terminate the lease. CAFE places the restaurant operator into bankruptcy, essentially freezing everything and boxing NevStar in. With that leverage CAFE used the cash it owed NevStar to buy out the minority partners in the Restaurant Operator, with the exception of NevStar. CAFE then sold all interest in Operator to a Mirage affiliate RVNI. Prior to all this RVNI was in negotiation to purchase NevStar. Nevstar wanted its rent money from CAFE, but CAFE, obviously aware of the RVNI situation, decided to hose Nevstar, and it all worked. An over simplified explanation but should be clear. Now RVNI (part of Mirage) is the landlord. All arrears (past due rent) are waived by RVNI. CAFE got a sweetheart deal (though temporary) on the rent, that being 1/2 of the positive cash flow from operations. This is a huge concession. Restaurants three primary cost are, food, labor and rent. Rent usually being a fixed $ amount per square foot. This is where most mom-and-pops go wrong, paying too much in rent. Having a primary cost reduced to 1/2 of free cash is quite a sweetheart deal. The Company, Mirage and the Restaurant Operator agreed to seek jointly the dismissal of the Restaurant Operator's bankruptcy proceeding. This indicates possible collusion between CAFE and Mirage from the beginning. As for Mirage's motivation to buy out Nevstar, clearly it is property related . As for their interest in CAFE, one has to assume from the part of the deal involving CAFE that there is an interest on the part of Mirage to see that the restaurant continues to operate, at least for now. Don't know enough about the property to know if Mirage wants to build something where the restaurant is now? In any event, all this puts the Las Vegas operation (at least for now) in a much stronger financial position as it was prior.

To: ChrisJP who wrote (578)	1/22/1998 5:04:00 PM
From: FawnVu	Read Replies (4) \| Respond to of 876

Good Afternoon Chris, Harold, Dave, Richard and everyone... I just got off the phone with Larry Mehann and he sounded very positive and confident that Country Star will take off in 98, giving it some times or his name is mud. He had joined the Hollywood restaurant since Nov 97 and have been trying to establish a foundation for a turnaround ever since. He told me that the previous manager was quite young, 26, who didn't like country and had no connections with people in the country business. Larry is a 52 years old Capricorn who has lots of connections with country stars, rodeos, and Coors beer managements which cowboys usually drinks and he feels confident that within the first 6 months of 98, we shareholders will able to see and hear the difference in Country Star. The Hollywood location has been focusing on tourists mainly as customers in the past which was very wrong. Larry said, of course, he will continue to use his connections to get Country Music Stars, rodeos shows and cowboys that tours several times a year to stop by the restaurant as a resting place when they're out there, but he is also focusing heavily on the local people within LA because they are the bread and butter of the restaurant, the rest are cremes. The place is a night club with every Wed is Ladies night, every Friday have live music. He is promoting the restaurant via radio as well as on the air (he just fax to TV stations about Super Bowl Sunday). This Sunday, there is 150 RSVP for the Super Bowl party and he anticipates about 150 more to come. In the next two weeks he will have Clint Black, a country celeb, and Wynoma, another celeb, in a couple of months after that and many more to come. As for the Las Vegas location (Larry used to live in LV), he said they are undergoing some changes also and will have country shows every week with well known country stars in the near future. The Alladin place in LV used to have a country show every week and it was very successful so Country Star LV will try to copy the same idea. After talking with Larry, IMO, I feel more confident knowing that CAFE has someone who is experienced and well connected to run the restaurant. It brings my hope up somewhat for now but there's still a long way ahead and we won't probably see much change in price until 3-6 months, IMO of course. I did ask Larry whether he owns CAFE stock and his reply was no. He did ask a couple of times on this matter but he guessed the company policy does not allowed at this time??? and if he did he then would be an insider!! Larry is now focusing on running the restaurant and turn it around as quickly as possible. Well, just wanna pass whatever infos I have to you all, take it with a grain of salt or however you like to. You can call Larry yourself at (818)762-3939 and talk to him directly, he's a very nice guy. If any of you live in or near the area, he welcomes shareholders to come in for a visit and chat, he has nothing to hide, he said. I'm in the east coast so if any of you have a chance to visit there, give us eastcoasters your feedback. Fawn P.S. Larry doesn't know if there's still conversion left, plus other questions regard to our beloved stock. His job is to run the restaurant and he will keep it that way for now, he said.