ENBC Corp (fka ENBBQ)

[HDOGTX]

Here is a ton of info I have been into today on this one!

New World sees future growth with Einstein/Noah Bagel buy
The Denver Business Journal - March 1, 2002
by Patrick Sweeney
Denver Business Journal

When New World Restaurant Group Inc. announced it would acquire the beleaguered Golden-based bagel chain Einstein/Noah Bagel Partners, it raised a few eyebrows within the restaurant industry.

Formed in 1995, Einstein had carved a niche for itself in the growing "quick casual" restaurant segment with its flavored bagels and cream cheese spreads. But the company soon found itself making headlines for its April 2000 bankruptcy filing instead of its trademark bagels.


Still, New World CEO Tony Wedo said his company saw the potential to resurrect the brand that many restaurant industry watchers had dismissed.

"We saw the Einstein brand as a terrific vehicle for our future growth," Wedo said. "And we liked that it was already positioned firmly in the day market."

Einstein emerged from bankruptcy protection in June 2001 after New World came in as the highest bidder for the cash-strapped company in an auction held at U.S. Bankruptcy Court in Phoenix.

New World spent $160 million in cash for ownership of the Einstein/Noah brands.

The deal that Wedo said took nearly a year to put together almost didn't happen. At one point in the bidding, Einstein announced that it was going to sell to a New York-based private equity firm called Three Cities Research. Three Cities had bid $145 million in cash for the bagel maker, but the court bidding process requires the seller to accept the highest offer.

"I think what it meant to Einstein is that they got a great partner in the New World Co. as it relates to experiencing the true and total growth of the concept," Wedo said. "I think both sides benefited from this transaction. When both sides win, it's a strong indicator for future success."

Wedo said he was not concerned about what analysts and other industry insiders thought of the acquisition that forced his company to assume Einstein's $30 million worth of liabilities. Despite its bankruptcy, Wedo said, Einstein had cultivated "a very big gourmet sandwich business.

"We recognized a terrific base business that was in place," Wedo said.

As part of the deal, New World acquired 460 bagel stores operating under the Einstein/Noah brand in 29 states. The Eatontown, N.J.-based New World also got a bagel manufacturing plant in Los Angeles, a support center in Golden and ownership of all trademarks.

New World now operates 800 bagel locations across the country, making it the largest bagel baker in the nation.

Along with the Einstein/Noah brands, New World also owns and operates four other restaurant brands, including the Chesapeake Bagel Bakeries, Manhattan Bagel, Noah's New York Bagels, New World Coffee and Willoughby's Coffee.

New World is looking to establish Einstein as a leader in the restaurant franchise industry. He added that the company is looking to add 50 to 100 Einstein/Noah locations to its portfolio and that initial interest is already high.

"We're operating to win this war over the next 10, 15, 20 years, not over the next few years," Wedo said.

A typical Einstein location is between 2,200 and 2,500 square feet with a seating capacity for 40 people. Wedo said each location posts about $800,000 in annual sales.

The demographic for the average Einstein customer is a college-educated professional between 25 and 54 years old with an annual household income of about $50,000. The stores tend to be slightly more popular among women then men.

Along with launching a new marketing campaign, Wedo said New World has several other plans on the horizon to further promote the Einstein/Noah brand.

"I would anticipate that we have three types of potential growth with licensings, franchising and company store development," Wedo said. "We will build approximately 10 company stores in 2002, and we will build approximately 18 additional licensed stores for a total of 30 by the end of 2002."

Einstein parent reduces loss by almost 20 percent in 2005
The Denver Business Journal - February 23, 2006

New World Restaurant Group Inc. of Colorado continued in the red for its fiscal 2005, ended Jan. 3, 2006.

But the owner of the Einstein Bros. Bagels restaurant chain, among others, cut its net loss for the year by 19.5 percent to $14 million, or $1.42 per share.


The company reported a loss of $17.4 million, or $1.77 a share, in 2004.

There are no analysts' estimates on the company.

New World boosted 2005 revenue 4 percent to $389.1 million from $373.9 million a year earlier.

Same-store sales increased 5.4 percent last year, compared to 5.6 percent in '04, offset by a .2 percent drop in transactions.

Same-store sales -- also called comparable-store sales -- are sales at stores that have been open a year or more. They are a key performance measure, allowing investors to see what component of overall sales growth came from new store openings.

Based in Golden, New World (Pink Sheets: NWRG.PK) operates fast-casual restaurants under the Einstein Bros., Noah's New York Bagels and Manhattan Bagel brands. The company has 626 locations nationwide -- including 435 company-owned, 121 franchised and 70 licensed restaurants.

For last year's fourth quarter, New World reported a net loss of $723,000, or 7 cents a share -- down sharply from $2.1 million, or 21 cents a share, in 2004's last period.

Fourth-quarter revenue increased nearly 7 percent to $103.9 million from $97.3 million for the same quarter a year earlier.

New World's long-term debt for 2005 remained relatively flat compared to the previous year, at $160.6 million.

"New World achieved positive results in virtually all its key performance categories in 2005. ... We have made important improvements in all facets of our operations and laid the groundwork to pursue continued growth ...," Paul Murphy, company CEO and president, said in a statement.


The restaurant company also hoped to spark growth with the October 2004 introduction of its Einstein Bros. Cafe concept, designed to "move the brand beyond the bagel" by creating more sit-down-type restaurants. The cafes offer broader menus and table service.

New World said then it planned to build new cafes and convert existing Einstein Bros. Bagel locations, market by market, to cafes. It hoped to convert more than 370 bagel restaurants to cafes by the end of 2007.

But only eight cafes have opened since late 2004 -- five in the Denver area and three in Colorado Springs -- according to the Einstein Cafe Web site.

bostq

Published: May 28, 1998
Boston Chicken Inc. said yesterday that it had hired the investment banker Morgan Stanley to help the company sell some or all of its interest in the Einstein/Noah Bagel Corporation. Boston Chicken owns 17.3 million shares, or 52 percent, of Einstein/Noah Bagel. At Einstein/Noah's closing price on Tuesday, the shares would be worth $95 million. Einstein/Noah, based in Golden, Colo., franchises 200 bagel stores under the names Einstein Brothers and Noah's New York Bagels. Boston Chicken, also based in Golden, franchises more than 1,600 Boston Market fast-food restaurants.


http://www.hrsclaimsadministration.com/cases/bc/bci2_mailed%20notice_04192006.pdf



In 1999, Boston Chicken began looking to sell its interest in ENBC, but no buyers were immediately forthcoming. A new chief financial officer for ENBC, Paula Manley, was appointed in June of that year, and she was able to report encouraging financial results for the early quarters of the year. Revenues were increasing and net losses decreasing, attributable to increases in per store sales and reductions in the work force. Despite its troubled relationship with majority shareholder Boston Chicken, ENBC remained the company's top bagel shop as a new century approached



http://www.chicken-stock.com/



Chicken' inks licensing deal with Heinz

Nation's Restaurant News, May 3, 1999 by Richard L. Papiernik
Bankruptcy court must approve pact

GOLDEN, COLO. -- Put the soup on the back burner, can the Ken-L Ration, hold up those Weight Watchers and cap the ketchup.

Make room for Boston Chicken to flap its grocery-store wings among those and all the other "57 Varieties" that have made Pittsburgh-based conglomerate H.J. Heinz Co. one of the largest packaged-food suppliers in the world.

Boston Chicken Inc. -- now in bankruptcy reorganization -- and Heinz have signed a 10-year licensing agreement that would give Heinz an exclusive right to "the manufacture and sale" of packaged-food products under the Boston Chicken and Boston Market brand names.

Related Results: Boston Chicken reorganization approval
Boston Chicken: All over but
the carving...
MCDONALD'S TO BUY BOSTON
MARKET.... More
Video
Steve Bailey, The Boston Globe
More
Though numerous details. including specifics on the packaging and naming of the products, have not vet been revealed, the deal is expected eventually to put Boston Chicken's prepackaged goods into thousands of supermarkets. convenience stores and warehouse sales operations throughout the country.

Heinz, which has annual sales of $10 billion and a marketing presence in some 200 countries, said it would begin getting the Boston Chicken products into test markets later this year if mandatory bankruptcy court approvals are cleared.

Upon completion of the tests, Boston Chicken would join a growing list of restaurant companies marketing branded packaged goods in grocery stores. Among them are Pizzeria Uno, Marie Callender's, Starbucks, White Castle and Taco Bell. Several of the chains work with manufacturing firms, such as Kraft and Procter and Gamble, to put their foods in the retail markets.

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Heinz officials said they ordinarily would not reveal such information so far in advance of a product introduction, but the proceedings of Boston Chicken through bankruptcy court have made those revelations necessary.

Boston Chicken has asked the bankruptcy court to keep the details of the Heinz contract sealed because of proprietary and competitive concerns.



Looks like someone got the trademark. I recently saw a TV ad for frozen chicken dinners "just like you get in the resturant." I never went to any of the resturants, thou there were several here in the Seattle area. Its easier to get a chicken at the market, wash it, put coat the skin with salt, pepper and garlic salt, then put in in the oven on a wire screen over a cast iron skillit at 350 degrees for an hour and a half as I surf the 'net. If you put in a couple of potatoes on the side, you can invite your favorite honey home for dinner, and eat till your full. Wine, of course will top the meal.



In early April the trustee of the Boston Chicken Bankruptcy Plan Trust, as holder of a majority of the outstanding common stock of ENBC, filed a reorganization plan for the bankrupt concern. New World, ENBC's largest creditor, supports the plan but said its affiliate made the bid for the company in the event that the trustee's reorganization plan isn't confirmed.



ENBC is a Delaware corporation, with 34,083,681 shares of common stock outstanding as of March 17, 2000. The Trustee, as successor in interest to BCI under the Boston Chicken Plan, owns approximately 51% of the outstanding equity of ENBC. The remaining equity is publicly held. On the Effective Date, the existing common stock of ENBC will be canceled and New Common Stock of the Reorganized ENBC will be issued as described herein and in the Plan.

Bagel Partners is a Delaware limited partnership. ENBC and the General Partner (a wholly owned subsidiary of ENBC) currently own 77% and 1% of the Interests in Bagel Partners, respectively. The balance of the Interests in Bagel Partners is held by Bagel Funding and certain other persons including former members of management of the Area Developers. These limited partners and their approximate percentage ownership of total partnership units of Bagel Partners are as follows: ENBC-76.8%, Bagel Funding-21.68%, BC Detroit, L.P.-0.11%, BC Chicago, Inc.-0.27%, Douglas Henzlik-0.02%, Edwin Brownell-0.02%, Noah Alper-0.04%, and Pearce Tucker-0.02%.

ENBC, through a wholly owned subsidiary, is also the sole manager of Bagel Funding, the Holder of approximately 21.5% of the Interests in Bagel Partners.





D. THE BAGEL FUNDING PUT RIGHT

In addition to providing for certain matters concerning Bagel Partners' formation, governance, and ownership, the Partnership Agreement included provisions relating to Bagel Funding's nontransferable Put Right to, "put" its limited partnership Equity Interests in Bagel Partners (the "Bagel Funding Units") to Bagel Partners or ENBC under certain circumstances and subject to certain conditions. The Put Right modified a put right that had existed previously in connection with the Area Developer structure before the 1997 Transactions.

The Put Right is not an absolute right, and it was not unconditionally and immediately exercisable. Rather, certain procedural and time-based conditions are required to be met or satisfied before the Put Right can be exercised.

As more fully described below, as of the Petition Date, conditions to the exercise of the Put Right had not been satisfied.

If it were to have been properly exercised without violating the automatic stay, Bagel Funding Units are to be sold to either Bagel Partners or ENBC (as designated by Bagel Partners) at a formula price, and for the consideration provided for in the provisions governing the Put Right. The "Put Price," defined in Section 4.7(b), is a formula equal to 6.5 times annualized post-royalty store level cash flow reduced by any outstanding indebtedness (and increased by any cash) of Bagel Partners. Id. ss. 4.7(b). Calculated as of the Petition Date, the "Put Price" would be approximately $54.4 million.

The Partnership Agreement specifically provides who must respond to a properly exercised Put Right and what consideration may be given to Bagel Funding in exchange for the Bagel Funding Units:

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a. Upon receipt of a Put Right request from Bagel Funding, Bagel Partners decides whether it or ENBC will be responsible for satisfying the Put Right. Partnership Agreement, ss. 4.7(c). Bagel Funding cannot, at its discretion, unilaterally impose the Put Right on either Bagel Partners or ENBC; that decision belongs to Bagel Partners alone (and is subject to the automatic stay in ENBC's Case).

b. Whoever is designated to satisfy the Put Right by Bagel Partners may do so, at its option (not Bagel Funding's), by delivering the Put Price either in (i) Cash (if allowed under the Prepetition Credit Facility), or (ii) shares of ENBC common stock, par value $0.01 per share, or (iii) any combination of the foregoing. Id.

The Prepetition Credit Facility currently prohibits, and has always prohibited, the payment of the Put Right in Cash. Thus, if the Put Right were deemed to be exercised today, the obligation under the Partnership Agreement could only be satisfied by a distribution of ENBC common stock. Section 4.7(c) of the Partnership Agreement further provides:

In the event the Put Price is paid in whole or in part by the delivery of shares of ENBC Common Stock, (i) the value of such shares shall be equal to the number of shares delivered multiplied by an amount per share equal to the average of the closing sales prices per share of ENBC Common Stock, on the principal stock exchange or quotation system on which such common stock is traded or quoted, for the twenty trading days ending with the second Business Day preceding the day on which shares are delivered ... and (ii) ENBC will use its reasonable best efforts to cause a registration statement with respect to the resale of such shares ... to be filed and become effective...

Id. In the twenty days prior to the Petition Date, ENBC common stock traded at approximately 22.41 cents per share. As of the Petition Date, there were approximately 34,083,681 outstanding shares of ENBC common stock (and at December 26, 1999, ENBC had 9,866,698 shares of ENBC's common stock reserved for issuance upon exercise of outstanding options and warrants). ENBC's certificate of incorporation authorizes it to issue up to a total of 200 million shares of common stock. Thus, after deducting total outstanding shares and shares reserved for issuance, ENBC is currently authorized to issue another 156,049,621 shares of common stock. Based upon Section 4.7(c), ENBC could deliver these shares of ENBC common stock to Bagel Funding in payment of $34,970,720.06 of the Put Price (156,049,621 multiplied by 22.41 cents) if the Put Right were deemed to have been exercised as of the Petition Date. Since the Petition Date, the trading price of ENBC common stock has dropped significantly, thus reducing the amount of the Put Price that could be paid through the issuance and delivery of ENBC common stock and increasing the percentage of residual equity held by Bagel Funding in Bagel Partners following payment of the Put Price in ENBC common stock.

The Partnership Agreement does not constitute a guarantee that Bagel Funding will receive value equivalent to the Put Price under all circumstances; nor does it guaranty a return, or rate of return, to Bagel Funding on its capital. Indeed, neither the Put Right nor the Put Price are given a preference upon or even provided for in liquidation; nor are they mentioned or provided for in the sections regarding merger, dissolution or wind up of Bagel Partners (or, for that matter, in any other sections of the Partnership Agreement). See, e.g. Partnership Agreement, ss. 9.1 (regarding dissolution).

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Rather than guarantee the value of the Put Right or Bagel Funding's Interests in Bagel Partners, the Partnership Agreement clearly contemplates a situation in which (i) payment of the Put Right in Cash is prohibited by the Debtors' financing agreements and (ii) ENBC has insufficient ENBC common stock to satisfy the Put Right in full. In this situation, Section 4.7(e) of the Partnership Agreement requires ENBC to "issue the maximum number of shares of
[ENBC] Common Stock in satisfaction of the Put Price that it is permitted to issue without obtaining prior stockholder approval" and the Put Right is "deemed exercised only with respect to that portion of [Bagel Funding] Units held by
[Bagel Funding] equal to the portion of the [Bagel Funding] Units ... equal to the aggregate Put Price actually paid by the issuance of such Common Stock . . . ." Id. ss. 4.7(e). Thus, because only approximately $3 5 million of the Put Price could be paid as of the Petition Date through ENBC common stock, as stated above, Bagel Funding would retain 35.67% of its Bagel Funding Units, or 7.8% of the total equity of Bagel Partners. The Put Right would remain unexercised as to remaining Bagel Funding Units owned by Bagel Funding.

On March 28, 2000, Bagel Funding formally requested that Bagel Partners seek to terminate Bagel Partners' obligations to pay royalties (and any obligation of ENBC to provide services) pursuant to all franchise and license agreements between Bagel Partners and ENBC. Bagel Partners, in turn, forwarded the letter request to ENBC for response. As of July 27, 2000, ENBC had not consented to such termination of franchise and license agreements.

On March 30, 2000, contrary to the terms of Section 4.7(a) of the Partnership Agreement, Bagel Funding sent a letter to Bagel Partners purporting to exercise the Put Right. In its letter, Bagel Funding further stated that "
t [was] apparent from the statements and actions of ENBC that it [had] rejected the license termination . . .", and, Bagel Funding asserted that it had an immediate right to exercise the Put Right. Bagel Funding further demanded (again, contrary to the Partnership Agreement) immediate cash payment of the Put Price because, in its view, "ENBC [had] no right to issue worthless stock in satisfaction of Bagel Partners' obligation to purchase the [Bagel Funding Units]." Bagel Funding has also demanded that Bagel Partners issue to it a promissory note in satisfaction of the Put Right. The Debtors challenged the claims of Bagel Funding under the Put Right on the grounds it is (i) not provided for in and is contrary to the Partnership Agreement, (ii) prohibited by the Prepetition Credit Facility without the consent of the lenders thereunder, and (iii) under the circumstances, invalid under Delaware law. Bagel Funding disputes many of the Debtors' characterizations and conclusions.

Bagel Funding asserts that the Put Right entitles Bagel Funding to an Interest in the Bagel Partners case in the approximate amount of $54.4 million and, furthermore, regardless of whether Bagel Funding's rights under the Put Right are determined by the Court to be characterized as a Claim or an Interest, the Put Right entitles Bagel Funding to receive a distribution equal to the full amount of the Put Price (calculated by the Debtors' accountants to be $54.4 million as of December 31, 1999) before either (i) any distribution may be made on account of the partnership interests in Bagel Partners held by ENBC or the General Partner; or (ii) any distribution may be made for the Bagel Partner's estate or its assets for the benefit of ENBC or its Creditors, including the Debenture Holders.

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Bagel Funding further asserts that any determination by the Bankruptcy Court that the Put Right had any value might render the Plan unconfirmable.

As stated above, the Debtors and the Proponent dispute Bagel Funding's allegations.

On July 20, 2000, the Court conducted a hearing to determine the value of, and other issues associated with, the Put Right. On August 7, 2000, the Court entered a written memorandum opinion and order (the "Put Right Ruling") determining that it is appropriate to classify the Put Right as an Equity Interest in Bagel Partners' Case and any rights that Bagel Funding may have do not constitute Claims against ENBC.

Bagel Partners is a Delaware limited partnership. ENBC and the General Partner (a wholly owned subsidiary of ENBC) currently own 77% and 1% of the Interests in Bagel Partners, respectively. The balance of the Interests in Bagel Partners is held by Bagel Funding and certain other persons including former members of management of the Area Developers. These limited partners and their approximate percentage ownership of total partnership units of Bagel Partners are as follows: ENBC-76.8%, Bagel Funding-21.68%, BC Detroit, L.P.-0.11%, BC Chicago, Inc.-0.27%, Douglas Henzlik-0.02%, Edwin Brownell-0.02%, Noah Alper-0.04%, and Pearce Tucker-0.02%.

ENBC, through a wholly owned subsidiary, is also the sole manager of Bagel Funding, the Holder of approximately 21.5% of the Interests in Bagel Partners.