A popular Texas cafeteria chain known for its comfort foods announced it plans to sell the company to pay off its millions of dollars in debt.
Luby’s said Wednesday that it will begin the process of selling its business operations and assets, including real estate, to pay off $35 million of debt. The remaining money from the sale will go to stockholders, the Houston Chronicle reported.
“We believe that proceeding with this sale process followed by distributions will maximize value for our stockholders, while also preserving the flexibility to pursue a sale of the company should a compelling offer that delivers superior value be made,” Luby’s CEO Chris Pappas said in a statement. “This path also provides for the potential to place the restaurant operations with well-capitalized owners moving forward.”
In the meantime, some restaurants will remain open while the Houston-based company seeks a buyer.
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The move to sell comes after a special board committee examined how to maximize shareholder value, which also considered selling the company altogether. Luby’s has been struggling to lure customers in recent years.
But the company’s financial decline took an even steeper hit when officials ordered all restaurants to close due to the coronavirus pandemic. The company used a $10 million coronavirus aid loan from the federal government to continue paying employee during the virus outbreak.
On Wednesday, the company said it took a $3.8 million loss during its second quarter that ended in March. This figure is down from $6.6 million in earnings compared with the same period last year.