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 operations1 or the company’s Culinary Contract Service business. The Fort Worth-area property included in the sale is the location in Forest Hill location, meaning it is likely to remain in operation.
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. The company does not currently plan to adjust the estimated liquidation value of the company as a result of this transaction. This amount does not include any value that may be obtained through future sales of Luby’s owned real estate underlying 25 of the cafeteria locations.
Gin, Chief Executive Officer of the purchaser, commented, “We are so pleased to be able to acquire the operation of these Luby’s Cafeteria stores, one of the iconic brands in the Texas restaurant market. This transaction will allow us to continue serving the many loyal Luby’s customers at these locations and to provide long-term employment opportunities for the many associates currently at these locations.”
Gerald Bodzy, Chairman of the Board of Luby’s, commented, “I could not be more pleased than to see Calvin Gin, along with many of the existing management team, able to carry on the fine tradition of Luby’s brand of food and service in Texas that dates back to 1947.”
Gin is a member of the storied Gin Family, who established The Flying Food Group by Sue Gin, which has grown to the third largest airline catering company in North America and provides food preparation services for others, including Starbucks, throughout the country. Gin currently is a co-founder or partner in several entities including Helios Visions, WorkPlate, and Charming Studios. Previously, he also served as the Chief Financial Officer with Blue Plate Catering, Ltd. and Applause Food Services, Inc.
The sale of the Luby’s Cafeteria operations is another step in the execution of the previously announced plan of Luby’s to sell its assets, pay its liabilities, and return the remaining cash to shareholders under the company’s previously announced plan of liquidation and dissolution approved by its shareholders on November 17, 2020. The company and its financial advisor said it contacted over 235 entities before accepting the best offer, which came from the Gin group.
Luby’s is actively engaged in attempting to monetize the real estate it owns that is related to its cafeteria restaurant business, including the 25 properties the company intends to sell to a third party or parties that can, in turn, provide the purchaser operating leases for those properties. The purchaser will also assume the leases for seven Luby’s locations that are currently under lease. Luby’s is being advised by Jones Lang LaSalle on these real estate sales. The Special Committee of the Board of the company is being advised by Gibson, Dunn & Crutcher LLP on legal matters. The company is also being advised by Sidley Austin LLP on legal transaction matters. The purchaser is being advised by Winston & Strawn LLP on legal matters.
In March, Luby’s completed the sale of many of its Fuddrucker restaurant properties.
The agreement between Luby’s and the purchaser is subject to normal and customary conditions for transactions of this nature. The transaction is not subject to a financing contingency. The parties currently anticipate the transaction will close before the end of the company’s current fiscal year.