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Updates Estimated Net Assets in Liquidation for Closed Transactions
HOUSTON, Oct. 1, 2021 /PRNewswire/ -- Luby's, Inc. (NYSE: LUB) ("Luby's"), which is in the process of monetizing its assets for the benefit of its shareholders, announced today that it has completed its previously announced sale of 26 real estate properties to STORE Capital for $88,000,000.
Luby's utilized a portion of the proceeds from this sale and previous sales to repay its senior lender, MSD PCOF Partners VI, LLC, in full.
Updated Estimate of Net Assets in Liquidation under the Liquidation Basis of Accounting
As a result of Luby's shareholder approval of its plan of liquidation on November 17, 2020, effective November 19, 2020, in accordance with Generally Accepted Accounting Principles ("GAAP"), the Company began reporting its financial results on the liquidation basis of accounting. The liquidation basis of accounting requires, among other things, that management estimate asset sales net proceeds on an undiscounted basis, as well as includes in the Company's assets and liabilities the undiscounted estimate of future revenues and expenses through the end of the liquidation.
On July 19, 2021, Luby's reported an estimate of future liquidating distributions of approximately $4.13 per common share as of June 2, 2021 (unaudited), based on the number of common shares outstanding on that date. Since June 2, 2021, Luby's has closed on the sale of 34 real estate assets, including those in the STORE transaction, closed on the sale of the Fuddruckers franchise business unit, closed on the sale of the Luby's Cafeterias brand name and multiple operating locations, received full forgiveness on its PPP loan, and has settled other of its obligations. Luby's estimates that the cumulative impact of these transactions, net of other fourth quarter ordinary course activities and changes in estimates related to the liquidation basis of accounting, results in an increase in estimated future liquidating distributions of approximately $0.76 per common share (unaudited) over the last reported estimate, for a total estimate of future liquidating distributions of approximately $4.89 per common share when added to the last reported estimate. This estimate of future liquidating distributions includes projections of asset sales net proceeds and net operating revenues to be received and costs and expenses to be incurred, including costs to dispose of the Company's assets to complete the plan of liquidation which is currently projected to be completed by June 30, 2022. There is inherent uncertainty with these projections, and accordingly, these projections could change materially based on a number of factors both within and outside of Luby's control. There can be no assurance that these estimated liquidating distributions per common share will be realized. Such amounts should not be taken as an indication of the timing or the amount of future distributions or our actual dissolution. As of today's date, Luby's has seven additional real estate properties that are under contract but have refundable deposits, and accordingly we do not recognize any potential increase in liquidation value from these asset sale transactions in our estimate of future liquidating value. The current estimate of net assets in liquidation has been estimated based on undiscounted cash flow projections and assumes a final liquidation on June 30, 2022 even though the actual timing of the sale of the Company's remaining operating businesses and 28 remaining real estate holdings, including the properties currently under contract that have not yet closed, cannot be determined with any specificity at this time. As such, the final liquidation of the Company is subject to future events and uncertainties. Liabilities are carried at their contractual amounts due and are not adjusted until settled. It is not possible to predict with certainty the timing or aggregate amount which may ultimately be distributed to our shareholders and no assurance can be given that the distributions will equal or exceed the estimate presented in this release.
Luby's, Inc. (NYSE: LUB) previously announced its plan of liquidation and dissolution, which was approved by its shareholders on November 17, 2020. Luby's has sold both its restaurant brands, Luby's Cafeterias and Fuddruckers. Luby's is actively seeking buyers for its Luby's Culinary Contract Services business segment, and its packaged foods business segment. Luby's is in the process of actively seeking buyers for its remaining real estate assets.
Forward Looking Statements
This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release, other than statements of historical fact, are "forward-looking statements" for purposes of these provisions, including the statements regarding sales of assets, effects of the Company's Liquidation and Dissolution Plan (the "Plan"), expected value or proceeds attributable to the sale of assets, and expected proceeds to be distributed to stockholders or the timing thereof. Luby's cautions readers that various factors could cause its actual financial and operational results to differ materially from those indicated by forward-looking statements made from time-to-time in news releases, reports, proxy statements, registration statements, and other written communications, as well as oral statements made from time to time by representatives of Luby's. The following factors, as well as any other cautionary language included in this press release, provide examples of risks, uncertainties and events that may cause Luby's actual results to differ materially from the expectations Luby's describes in such forward-looking statements: general business and economic conditions; the effects of the COVID-19 pandemic; the impact of competition; fluctuations in the costs of commodities, including beef, poultry, seafood, dairy, cheese and produce; increases in utility costs, including the costs of natural gas and other energy supplies; changes in the availability and cost of labor; the seasonality of Luby's business; changes in governmental regulations, including changes in minimum wages; the effects of inflation; the availability of credit; unfavorable publicity relating to operations, including publicity concerning food quality, illness or other health concerns or labor relations; the continued service of key management personnel; and other risks and uncertainties disclosed in Luby's annual reports on Form 10-K and quarterly reports on Form 10-Q, including information regarding the risks, uncertainties and other factors relating to the Plan, the expected net proceeds from the sale of assets, and expected proceeds to be distributed to stockholders.
For additional information contact:
John Garilli, Interim CEO
SOURCE Luby's, Inc.