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Bankruptcy court approves Schlotzsky's auction and sale plan
Company Continues to Receive Inquiries From Potential Investors
November 23, 2004
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ClaudeAUSTIN, TX -- (MARKET WIRE) -- 11/24/2004Schlotzsky's, Inc. (OTC: BUNZQ) today announced that Judge Leif M. Clark with the United States Bankruptcy Court for the Western District of Texas, San Antonio Division, has approved its motion to set a procedure for the sale of substantially all of the assets of the Company to a qualified investor. When the sale is completed, Schlotzsky's will have new ownership, and the new owner will be able to operate the Schlotzsky's brand, Company restaurants, and franchise system without the burden of the millions of dollars in debts that forced the Company to seek bankruptcy protection in June 2004. "We hope to soon have a strong financial owner or owners that will enable us to grow again, provide jobs for our employees, and better serve our franchisees -- essentially, to have a new lease on life," said Sam Coats, President and CEO of Schlotzsky's, Inc. "We are delighted that the Court has approved this sale procedure."The process will be conducted as follows:· December 6:Qualified bids -- equal to or greater than the reserve price of $25 million -- are due by 12 noon CST.· December 7:An auction for Schlotzsky's assets will take place at the Dallas offices of the Company's law firm, Haynes and Boone. Bids will begin with the best-qualified bid and continue in minimum increments of $100,000. Schlotzsky's and certain secured creditors determine the "highest and best" bid.· December 8:The "highest and best" bid is presented to Judge Clark at a "Sale Approval Hearing" at 10:30 am CST.· December 31:Deadline for the closing of the sale transaction, although it could take place within days of the December 8 hearing. Schlotzsky's motion reserves the right to name a lead investor prior to the December 6 deadline, with that lead investor then becoming eligible for a break-up fee of $250,000. Schlotzsky's continues to be approached by qualified parties interested in participating in the auction process and has been contacted by more than 10 new potential investors since issuing its November 16 press release announcing its plan to sell its assets via an auction. Because of this heightened level of interest, Schlotzsky's expects the auction process to attract as many as a dozen legitimate participants.About Schlotzsky'sSchlotzsky's Inc., founded in Austin, Texas, in 1971, through its wholly owned subsidiaries, is a franchisor and operator of restaurants in the fast casual sector. As of August 3, 2004, there were 511 Schlotzsky's® restaurants open and operating in 36 states, the District of Columbia and six foreign countries. Visit www.schlotzskys.com for more information. This press release may contain statements deemed to be "forward-looking statements" under the Securities Act of the Exchange Act. Any statement that is not a statement of historical fact may be deemed to be a forward-looking statement. Forward-looking statements are not meant to guarantee actual results, and may not be realized because they are based upon our current expectations, and are subject to a number of uncertainties, many of which are beyond our control. Factors that may influence forward-looking statements or cause actual results to differ materially from those described by the forward-looking statements may include, without limitation, the ability of the Company to develop one or more plans of reorganization or sale with respect to the Chapter 11 proceeding, to attract qualified bidders to bid in excess of the reserve price, and to receive approval from the Court and other interested third parties. Because of the risks and uncertainties related to these and other factors, including the terms of any reorganization plan or sale ultimately confirmed, readers are cautioned not to place undue reliance on the forward-looking statements. There can be no assurance that any results described in any forward-looking statement will actually occur. It is possible that the equity of the Company will be restructured in a manner that will substantially reduce or eliminate any remaining value. We undertake no obligation to publicly revise the forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described above, in other documents filed by the Company with the SEC, and in the discussion under "Risk Factors" in the Company's most recent Form 10-K.source:Schlotzsky's, Inc
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