GOLDEN, Colo. -- Despite widely circulated rumors and conjecture in press reports, Boston Chicken officials are insisting the company will not seek Chapter 11 bankruptcy protection.
Sources at Boston Chicken told SN that the idea the company was poised to file for bankruptcy protection may have been bred by an 8K report Boston Chicken filed with the Securities and Exchange Commission as a matter of routine in mid-May.
"The 8K is an update of the 10K that's filed each year," said Karen Rugen, senior vice president of communications for Boston Chicken, based here. "In every public filing that you file as a public company, you're supposed to list every possible risk factor on earth because that's what the filings are for. And it was stated in that 8K that our auditors Arthur Anderson had released what's called a going concern opinion.
"That sparked some analysts to claim we had to file for Chapter 11 protection or we'd never make it. Some headlines indicated we're going out of business. As a result, others, including some of our competitors, are running around saying we're going to close all our stores. It's not true," Rugen added.
She zeroed in on particular statements that, she said, have caused some people to jump to erroneous conclusions.
"It's an overreaction to a listing of all possible risk factors in that recent 8K. A paragraph issued by Arthur Anderson [in the 8K report] said IF the company could not sell assets, IF the company could not improve store performance, and IF the company could not renegotiate its senior credit facility, then it might be in danger of not remaining a going concern," she said.
"Those 'ifs' are all being worked on right now. As you know, we're working with Morgan Stanley to sell some of our share of Einstein/Noah Bagel Corp.," she said.
Referring to Michael Jenkins, chairman, chief executive officer and president of the company, who was put appointed earlier this spring, Rugen added, "Mike's working very hard at improving store performance. And we're in conversations with our banks right now about renegotiating the senior credit facility."
Rugen pointed out that Jenkins purchased 100,000 shares of Boston Chicken stock earlier this month as evidence of his belief in the company.
She also said that Boston Market stores in Charlotte, N.C., which feature a new format (as reported in SN, April 28) continue to ring up sales way above the average sales-per-unit in the Boston Market system.
Plans have not changed for a rollout of 20 additional stores with the new format in other markets, she said. She also said the company is going ahead with a previously announced plan to buy back stores from franchisees.
