The proposed deal calls for Champps to remain a publicly held company after the transaction closes. Part of the strategy Champps would follow would be to "reinvest the sale proceeds in another profitable business or businesses," the company said in an announcement of the proposed sale.
The investment group that would acquire the company would include Chairman and Chief Executive Officer Michael O'Donnell and Chief Financial Officer David Womack. The deal is contingent upon customary closing conditions, including approval by Champps' shareholders. Other conditions include a due diligence review by Kinderhook, the negotiation and execution of a definitive purchase agreement and the obtaining of debt financing by Kinderhook.
The letter of intent with Kinderhook provides that Champps is free to solicit competing proposals for the acquisition of the company. If Champps determines to pursue an alternative transaction, it has agreed to pay Kinderhook a break-up fee of up to $2 million plus reimbursement of its expenses, depending on the timing and circumstances of its decision.
The Champps Entertainment Inc. chain owns and operates 49 restaurants and franchises 13 restaurants in 22 states. It competes in the upscale casual dining segment, adding an entertainment dimension through the use of videos, music, sports and promotions.
Kinderhook Industries LLC is a $470 million private equity firm that typically combines its capital with senior management from firms that it acquires. Its management buyouts usually focus on private entrepreneurial businesses and small public companies.
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