Aussies Taking Sizzler Private

Chuck Boppell, CEO of Worldwide Restaurant Concepts, says the company decided to sell to the Australasian buyers "after reviewing all our options." The company in December hired Los Angeles-based investment banking firm Houlihan, Lokey, Howard and Zukin to "explore strategic alternatives to increase shareholder value," according to a Worldwide announcement at the time. The $7-per-share price and the $210 million total of the offer from Pacific Equity are based on the buyer's offer to acquire the Sherman Oaks-based company at the exchange rate of US dollar to Australian dollar on April 28, but the actual per share merger price will be determined by the exchange rate one business day before the closing of the merger. The deal also provides that the per-share cost will vary from a floor of $6.65 to a high of $7.25

Besides its 306 Sizzler restaurants worldwide, including the recent openings of the first Sizzler in Beijing and some additional Pat & Oscar's locations in the US, Worldwide Restaurant operates 112 KFCs primarily in Queensland, Australia and 22 Pat & Oscar's locations. More than 70% of the Sherman Oaks firm's $347.2 million in 2004 sales were generated in Australia. Worldwide Restaurants is already into the fourth quarter of its 2005 fiscal year, and for the third quarter that ended Feb. 6 it reported that sales grew to $110.3 million, an increase of 4.9% over the $105.2 million in the third quarter of the 2004 fiscal year, with net income growing to $3.9 million, or 14 cents per share, compared with a loss of $700,000, or four cents per share, for the year-ago period. Third quarter same store sales growth was 1.2% at Sizzler USA, 6.5%at Sizzler Australia 6.8%at KFC and 11%at Pat & Oscar's. The third-quarter financial results remain preliminary while the company adjusts its lease accounting in accordance with recent SEC guidelines.

Worldwide's recent financial results include gains from a domestic Sizzler sale lease-back transaction in which the company sold seven California restaurants to Boston-based Cricsteak LP for $16 million. Total revenues at Sizzler USA declined $4.2 million from last year's quarter, however, because it has 14 fewer company operated restaurants as the result of a plan to exit the New York market and focus on core California restaurant operations. Pat & Oscar's closed a Downtown San Diego restaurant in the third quarter, but the division is still expected to open two new restaurants by the summer of 2005 and another three to five by the end of fiscal 2006, all of them in Southern California. The Sizzler restaurants that the chain sold to Cricsteak and then leased back are all on 10-year leases, each with options to extend for up to 20 more years.