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Luby's board of directors adopts plan of liquidation and dissolution

Christian Fernsby ▼ | September 10, 2020
Luby's, Inc. announced that it has approved and adopted a plan of liquidation and dissolution that provides for the sale of the company's assets and distribution of the net proceeds to the company's stockholders, after which the company will be dissolved.
Directors   Luby's
This follows Luby's June 3, 2020 announcement that it is seeking the sale of its assets. Approval of the Plan by the Company's stockholders is the next step in connection with these matters.

Topics: Luby

The Company intends to hold a special meeting of stockholders to seek approval of the Plan for which it will file preliminary proxy materials with the Securities and Exchange Commission.

The Company believes that the sale of assets pursuant to its monetization strategy and the dissolution will provide stockholders with an opportunity to receive cash distributions that maximize the value of their investment.

The assets to be sold include operating divisions Luby's Cafeterias, Fuddruckers, and the Company's Culinary Contract Services business, as well as the Company's real estate.

The Company will also provide an opportunity at the special meeting for its stockholders to vote on maintaining or revoking the Rights Agreement, often referred to as a "poison pill."

In addition, the Company will also seek stockholder approval to reduce the size of the Board of Directors and to permit action of stockholders by written consent.

The Plan of Liquidation outlines an orderly sale of the Company's businesses, operations, and real estate, and an orderly wind down of any remaining operations.

If the Company's stockholders approve the Plan, the Company intends to attempt to convert all of its assets into cash, satisfy or resolve its remaining liabilities and obligations, including contingent liabilities and claims and costs associated with the liquidation of the Company, and then file a certificate of dissolution.

The Company currently anticipates that its common stock will be delisted from the NYSE upon the filing of the certificate of dissolution, which is not expected to occur until the earlier of the completion of the asset sales or three years, but the delisting of its common stock may occur sooner in accordance with the applicable rules of the NYSE.

If at any time, including after the Plan is approved by stockholders, the Company receives an offer for a corporate transaction that, in the view of the Board of Directors, will provide superior value to its stockholders in comparison to the value of the estimated distributions under the Plan, taking into account factors that could affect valuation, including timing and certainty of closing, credit market risks, proposed terms and other factors, the Plan could be abandoned in favor of such an alternative transaction.

While no assurances can be given, the Company currently estimates, assuming the sale of its assets pursuant to its monetization strategy, that it could make aggregate liquidating distributions to stockholders of between approximately $92 million and $123 million (approximately $3.00 and $4.00 per share of common stock, respectively, based on 30,752,470 shares of common stock outstanding as of September 2, 2020).

Aggregate payments will likely be paid in one or more distributions.

The Company cannot predict the timing or amount of any such distributions, as uncertainties exist as to the value it may receive upon the sale of assets pursuant to its monetization strategy, the net value of any remaining assets after such sales are completed, the ultimate amount of expenses associated with implementing its monetization strategy, liabilities, operating costs and amounts to be set aside for claims, obligations and provisions during the liquidation and winding-up process and the related timing to complete such transactions and overall process.