990335 A&W Restaurants to Buy Long John Silver's

Detroit, MI - Burger joint A&W Restaurants Inc. said it had reached a definitive agreement for it and its equity partner Grotech Capital to gobble up seafood chain Long John Silver's once it emerges from bankruptcy-court protection.

Terms of the proposed acquisition were not disclosed.

Lohn John said in a statement it will file a motion with the U.S. Bankruptcy Court in Wilmington, Del., seeking approval for the acquisition agreement, including bidding procedures for other parties and payment of a $7.5 million fee to A&W and Grotech if their bid is topped.

Lohn John expects a hearing on the motion will be held at the end of this month.

A&W cannot complete the acquisition unless Long John's reorganization plan is accepted and it emerges from bankruptcy-court protection, the companies said. Long John said it is working with creditors and expects to file a plan in the late spring.

A&W Chairman, President and Chief Executive Sidney Feltenstein hopes to complete the deal by early summer, creating a firm with combined annual sales of about $1 billion and 2,300 stores in the United States and overseas.

Long John filed for Chapter 11 reorganization on June 1, 1998.

A&W said the two food chains will operate independently and for now Long John executives will continue to operate day-to-day operations. Feltenstein said ultimately the combined company would open stores at which both brands of foods would be served - a practice called co-branding - pairing A&W's strong lunch business with Long John's dinner crowd.

“Long John Silver's is a great brand and essentially it had itshands tied behind its back because years ago there was a leveraged buyout that inhibited the company's ability to grow,” he said, adding that his deal would not load the company down with more, new debt.

Long John Chairman and Chief Executive John Cranor said the deal will enhance the value of his chain's franchises.

“A&W will provide us with the financial stability and resources needed to complete our operational turnaround and strengthen (Long John's) leadership position in the quick service seafood restaurant industry,” he said.

Founded in 1919 in Lodi, Calif., A&W, with almost 1,000 stores in the United States and 17 foreign countries, features a menu of hamburgers, hot dogs, french fries, chicken sandwiches and A&W Draft Root Beer.

In 1995, A&W, now based in the Detroit suburb of Farmington Hills, was acquired by Feltenstein, a former Burger King executive, and Grotech, a Timonium, Md.-based venture capital firm. Long John Silver's has more than 1,300 restaurants in 37 states, Thailand and Singapore.

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