Meritage to Explore Going-Private Alternatives
GRAND RAPIDS, Mich., June 29 /PRNewswire-FirstCall/ -- Meritage Hospitality
Group Inc. (AMEX:MHG), the nation's only publicly traded Wendy's franchisee and
O'Charley's franchisee, today announced that its Board of Directors appointed a
Special Committee of independent directors to evaluate the plausibility of
going-private alternatives that would be aimed at enhancing long-term
shareholder value in the Company. Members of the Special Committee include
Board members James P. Bishop, Duane Kluting and Brian N. McMahon.
Meritage's Board believes that the Company's current stock price is not
representative of the underlying value and earnings potential. The Special
Committee will explore whether a going-private transaction, resulting in the
Company no longer filing reports under the Securities Exchange Act of 1934 or
being listed on the American Stock Exchange, could maximize shareholder value. This move would allow Meritage to avoid the extensive Sarbanes-Oxley Act costs
that the Company believes will disproportionately affect smaller publicly
traded companies once the Act is fully implemented. As part of its evaluation,
the Special Committee will explore maintaining a market in the Company's common
shares by re-listing the shares on a quotation service that does not require
issuers to be registered with the SEC such as the Pink Sheets. There can be no
assurance that the Special Committee's work will result in a going-private or
any other transaction.
Meritage is one of the nation's premier franchise operators currently operating
51 restaurants. The Company operates 48 "Wendy's Old Fashioned Hamburgers"
restaurants throughout Western and Southern Michigan, serving more than nine
million customers annually. Meritage has been one of the fastest growing
Wendy's franchisees within the Wendy's franchise system over the past several
years. Meritage is also the nation's first O'Charley's franchisee with three
O'Charley's restaurants in operation and two restaurants scheduled to open
later this year. Meritage holds the right to develop O'Charley's restaurants
throughout Michigan.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION ACT OF 1995 Certain statements contained in this news release that are not historical facts
constitute forward-looking statements, within the meaning of the Private
Securities Litigation Reform Act of 1995, and are intended to be covered by the
safe harbors created by that Act. Forward-looking statements may be identified
by words such as "estimates," "anticipates," "projects," "plans," "expects,"
"believes," "should," and similar expressions, and by the context in which they
are used. Such statements are based only upon current expectations of the
Company. Any forward-looking statement speaks only as of the date made.
Reliance should not be placed on forward-looking statements because they
involve known and unknown risks, uncertainties and other factors which may
cause actual results, performance or achievements to differ materially from
those expressed or implied. Meritage undertakes no obligation to update any
forward-looking statements to reflect events or circumstances after the date on
which they are made.
Statements concerning expected financial performance, business strategies and
action which Meritage intends to pursue to achieve its strategic objectives,
constitute forward-looking information. Implementation of these strategies and
achievement of such financial performance are subject to numerous conditions,
uncertainties and risk factors, which could cause actual performance to differ
materially from the forward-looking statements. These include, without
limitation: competition; changes in the national or local economy; changes in
consumer tastes and eating habits; concerns about the nutritional quality of
our restaurant menu items; concerns about consumption of beef or other menu
items due to diseases including E. coli, hepatitis, and mad cow; promotions and
price discounting by competitors; severe weather; changes in travel patterns;
road construction; demographic trends; the cost of food, labor and energy; the
availability and cost of suitable restaurant sites; delays in scheduled
restaurant openings; the ability to finance expansion; interest rates;
insurance costs; the availability of adequate managers and hourly-paid
employees; directives issued by the franchisor regarding operations and menu
pricing; the general reputation of Meritage's and its franchisors' restaurants;
legal claims; and the recurring need for renovation and capital improvements.
In addition, Meritage's expansion into the casual dining restaurant segment as
a franchisee of O'Charley's subjects Meritage to additional risks including,
without limitation, unanticipated expenses or difficulties in securing market
acceptance of the O'Charley's restaurant brand, the ability of our management
and infrastructure to successfully implement the O'Charley's development plan
in Michigan, and our limited experience in the casual dining segment. Also,
Meritage is subject to extensive government regulations relating to, among
other things, zoning, public health, sanitation, alcoholic beverage control,
environment, food preparation, minimum and overtime wages and tips, employment
of minors, citizenship requirements, working conditions, and the operation of
its restaurants. Because Meritage's operations are concentrated in certain
areas of Michigan, a marked decline in Michigan's economy, or in the local
economies where our restaurants are located, could adversely affect our
operations. DATASOURCE: Meritage Hospitality Group Inc.
CONTACT: James R. Saalfeld, Vice President of Meritage Hospitality Group Inc., +1-616-776-2600 Web site: http://www.meritagehospitality.com/
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