Luby’s, Inc. (“Luby’s” or the “Company”) (NYSE: LUB), today announced the Company has entered into an agreement to sell the Fuddruckers franchise business operations to a newly formed affiliate of Nicholas Perkins. The Company had previously sold/franchised a number of Company-owned Fuddruckers restaurants to a Perkins affiliate, making him one of the largest Fuddruckers franchisees.
The purchase by the Perkins affiliate, Black Titan Franchise Systems LLC, encompasses the master ownership of the Fuddruckers brand worldwide. The Fuddruckers brand currently has 92 locations operating in the United States, including 13 locations operated by affiliates of Mr. Perkinsii. It is currently anticipated the Fuddruckers franchise brand sale transaction could provide Luby’s, Inc. with approximately $18.5 million of value (most of which will be derived from the purchaser’s issuance of a note to Luby’s and assumption of certain liabilities). 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 is in addition to the value the Company will realize from the sale of Company-owned real estate at a number of Fuddruckers Company-owned stores.
“We’re excited to be purchasing Fuddruckers and look forward to working with Fuddruckers’ many dedicated, highly capable franchisees to further build this brand,” said Mr. Perkins, CEO of Black Titan Franchise Systems. “As a Fuddruckers franchise, I have a vested interest in ensuring that all Fuddruckers franchisees have the resources, infrastructure, and operational and marketing support they need to maximize their return on investment. This strategic alignment, when combined with the fact that we sell the ‘World’s Greatest Hamburgers’™, will ensure the long-term success of the brand and our franchisees.”
The sale of the Fuddruckers franchise 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 a formal plan of liquidation and dissolution approved by its shareholders on November 17, 2020. The Company and its financial advisor ran a robust sales process for the Fuddruckers franchise business, contacting over 150 entities before accepting the best offer, which came from the Perkins group. The Special Committee of the Board of the Company is being advised by Gibson, Dunn & Crutcher LLP on legal matters and Brookwood Associates on financial matters. The Company is also being advised by Sidley Austin LLP on legal transaction matters. The purchaser is being advised by Gebhardt & Smith LLP on legal matters and Intyllus Advisors LLC on financial matters.
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 within the next ninety days.
Update on Previously Announced Sale of Fuddruckers Locations
Luby’s, Inc. has now also completed the transfer of operations for all five additional Company-owned Fuddruckers locations to affiliates of Black Titan Holdings, LLC at Tempe, AZ, Kansas City, KS, St. Louis, MO, MacGregor, Houston, TX, and Creekside, Tomball, TX. Luby’s is also in advanced discussions to complete a sale/franchise of an additional, 14th, Fuddruckers Company-owned store to Black Titan, who will continue to run that store as a Fuddruckers franchise.
Following all these transactions, Luby’s, Inc. will have only five remaining stand-alone Company-owned Fuddruckers stores operating as well as four combos Fuddruckers operating with Luby’s Cafeterias.
Luby’s, Inc. (NYSE: LUB) previously announced its plan of liquidation and dissolution, which was approved by its shareholders on November 17, 2020. Besides today’s announcement of the agreement to sell the Fuddruckers business, Luby’s is actively seeking buyers for its Luby’s Cafeterias restaurant business segment and Luby’s Culinary Contract Services business segment, which provides food service management to sites consisting of healthcare facilities, corporate dining locations, sports stadiums, as well as sales of certain frozen Luby’s entrees through retail grocery stores. Luby’s also owns real estate assets related to its operations, for which it is also in the process of actively seeking buyers.
About Black Titan / Nicholas Perkins
Black Titan Franchise Systems LLC is a special purpose entity formed to own the Fuddruckers franchise business. The Company is affiliated with Nicholas M. Perkins and Black Titan Holdings, LLC which owns and operates 13 Fuddruckers franchises with plans to acquire two additional Fuddruckers locations. Mr. Perkins also owns and operates other food industry related companies.