Los Angeles - Koo Koo Roo Inc., an operator of 38 restaurants and Family Restaurants Inc., a privately held operator of El Torito and Chi-Chi's Mexican restaurants, signed a definitive agreement to merge.
The deal was unanimously approved by both companies' boards of directors and will be accounted for as a purchase.
When completed the deal will create a 325 unit restaurant company with operations in 31 states and 11 foreign countries.
Under the terms of the deal Koo Koo Roo holders will receive one share of stock in the newly registered company _ to be called Koo Koo Roo Enterprises, Inc. _ in exchange for each share held.
Concurrent with the signing of the deal, FRI provided a $3 million loan to Koo Koo Roo. Additionally FRI will issue new senior secured discount notes for net proceeds of approximately $21 million and is expanding its existing working capital line of credit by an additional $20 million.
Koo Koo Roo said documents are expected to be filed as part of a registration statement within the next few weeks, and proxy materials mailed to shareholders within the next 60-90 days.
Family Resaurants is primarily owned by affiliates of Apollo Advisors, L.P. and Leonard Green & Partners, L.P. and by FRI management.
Lee Iacocca, acting chairman of Koo Koo Roo, called the combination of the two companies "an ideal strategic fit."
Iacocca said "We believe the combination of these two companies will produce very powerful synergies and puts us on a solid platform from which we should be able to realize our full growth potential."
FRI operates 273 full-service Mexican restaurants in 30 states. Approximately 65 percent of its restaurants are located in California, Ohio, Pennsylvania, Michigan, Illinois and Indiana.
Koo Koo Roo operates 38 Koo Koo Roo California Kitchen restaurants which are located in California, Florida, and Nevada. In addition, Koo Koo Roo operates 14 Hamburger Hamlet restaurants in California and in the Washington, D.C. beltway area.
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