Agreement Subject to Court Approval
Cypress, CA (RestaurantNews.com) Real Mex Restaurants, Inc. (“Real Mex” or “the Company”) said its board has approved a bid to acquire virtually all assets of the Company and its subsidiaries from a newly created entity associated with certain of the Company’s noteholders including affiliates of Tennenbaum Capital Partners, Z Capital Partners and J.P. Morgan Investment Management.
A sale hearing is scheduled for February 10 at which the Bankruptcy Court will be asked to approve the bid, which was submitted in accordance with auction procedures previously approved by the Court. Court approval and satisfaction of various other conditions would clear the way for the purchaser to close the sale within approximately 30 days after the sale hearing. Following the sale the Real Mex restaurants and food production facility will operate outside of Chapter 11 with a substantially improved balance sheet.
Real Mex has been operating its restaurants and food production subsidiary as usual while working to improve its capital structure under Chapter 11. The noteholders include investors that were in the Company’s pre-petition capital structure.
“We remain confident in our turnaround plans and are looking forward to putting this challenging but necessary process behind us,” said Real Mex Chairman & CEO David Goronkin. “We are close to accomplishing our objectives in the Chapter 11 process and have the right teams in place to move our brands and company forward. A stronger financial foundation will allow us to accomplish this more quickly.”
Real Mex’s decision to restructure was driven by high debt, certain above-market rents and a weak economic environment, particularly in California where most of its restaurants are located. General Electric Capital Corp. has been providing the Company with DIP financing during the restructuring process.
About Real Mex
Headquartered in Cypress, California, Real Mex Restaurants is the largest full-service, casual dining Mexican restaurant chain operator in the United States with 141 company owned and operated restaurants as well as 20 franchised restaurants. Our brands include El Torito Restaurants, Acapulco Mexican Restaurants, Chevys Fresh Mex® Restaurants, Sinigual Restaurants, Las Brisas Restaurant in Laguna Beach, and several regional restaurant concepts. In addition, our Real Mex Foods division is a custom manufacturer of foodservice products specializing in soups, sauces, salsas, starches and proteins in a modern USDA-certified facility as well as a provider of broadline foodservice distribution to restaurants.
Forward-Looking Statements
This press release includes “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. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. They may contain words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” “will,” “should,” “may,” or “could” or words or phrases of similar meaning. These forward looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties that may cause actual results to differ materially from trends, plans or expectations set forth in the forward looking statements. These risks and uncertainties include, but are not limited to, the risk factors described in our filings with the Securities and Exchange Commission, as well as the following risks and uncertainties: (i) the ability of the Company to continue as a going concern; (ii) the ability of the Company to obtain court approval with respect to motions in the Chapter 11 cases; (iii) the ability of the Company to prosecute, develop and consummate one or more plans of reorganization with respect to the Chapter 11 cases; (iv) the effects of the Chapter 11 filing on the Company and the interests of various creditors, equity holders and other constituents; (v) court rulings in the Chapter 11 cases and the outcome of the cases in general; (vi) the length of time the Company will operate under Chapter 11 cases; (vii) risks associated with third-party motions in the Chapter 11 cases, which may interfere with the ability of the Company to develop and consummate one or more plans of reorganization once such plans are developed; (viii) the potential adverse effects of the Chapter 11 cases on the Company’s liquidity or results of operations; (ix) the ability to execute the Company’s business and restructuring plan and to timely and effectively implement the turnaround strategy; (x) increased legal costs related to the Chapter 11 filing and other litigation; (xi) the Company’s ability to maintain contracts that are critical to its operation, to obtain and maintain normal terms with customers, suppliers and service providers and to retain key executives, managers and employees; (x) the ability of the Company to obtain court approval of the proposed transaction, as to which matters no assurance can be offered; and (xi) the ability to access capital and capitalize on assets and the cost of such capital. All of the forward-looking statements made in this press release are qualified by these cautionary statements and we cannot assure you that the actual results or developments anticipated by our Company will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our Company or our business or operations. In addition, these forward-looking statements present our estimates and assumptions only as of the date of this press release. Except for our ongoing obligation to disclose material information as required by federal securities laws, we do not intend to update you concerning any future revisions to any forward-looking statements to reflect events or circumstances occurring after the date of this press release.