Description

Before you start gagging let's look at the facts. This once admired company has been through the wringer and appears to have escaped thanks largely to a debt exchange completed in September which not only removed $70 million of debt fron the balance sheet but, more importantly, removed covenants which hindered the separation of the growing and very healthy Captain D's division from the invalid Shoney's restaurant operation and the so-so comissary operation. I anticipate a spin-off of Captain D's early next year after a little more clean-up in the period ended 10/31 which is the fiscal yearend. At 5 times an easily doable $80 million of EBITDA this company is worth $400 million. Subtract $250 million of debt and you get $150 million or $3 a share. Also the CEO J. Michael Bodnar is a first class operator who already made one fortune as a hugely successful Wendy's franchisee. This company has been in a life or death struggle with debt and class action lawsuits. That they have survived at all is a testament to the current management and the debt restructuring to enable separation of the units outside bankruptcy is a coup.

Catalyst

Spin off of Captain D's from Shoney's. Debt paydowns. Getting discrimination suits behind them.