UPDATE: On September 9, Luby's sent the following statement to CultureMap, penned by its chief operating officer, Todd Coutee:
Regarding our recent press release, we want to be clear that we currently operate 80 Luby's and Fuddruckers locations open to serve our guests! We are here today and plan to be here for a long time. Our team members are Delighted to Serve guests and look forward to serving them during the upcoming holidays and beyond. We greatly value our loyal guests and invite them to continue to come out and dine in with us, or get our great food to go.
The plan will need to be approved by the company's shareholders. A date for that vote was not included in today's announcement.
Previously, Luby's stated it would seek a sale of its assets that would pay off its debts and generate money for its stockholders. Following the liquidation plan will generate between $92 million and $123 million, according to the company's estimates. That represents between $3 and $4 per share of its stock (approximately 30.7 million shares outstanding).
"This plan of liquidation is the next logical step in the company's previously announced plan to maximize value of the company through the sale of its operations and assets," Gerald Bodzy and Randolph Read, co-chairmen of the special committee responsible for the decision, said in a statement. "Our stockholders have expressed their support for seeking alternatives to continuing to operate the company's restaurants in their current form, and we believe the plan of liquidation will allow the company to accomplish that task in the most efficient manner."
Ultimately, the company intends to converts all of its assets into cash, resolve its debts, and then file a certificate of dissolution. Its stock (NYSE: LUB) would be delisted from the New York Stock Exchange at that point or possibly sooner according to the exchange's rules.
While a slim possibility exists that a buyer could be found that would keep the Houston-based cafeteria chain whole — Luby's also owns Fuddrucker's — the more likely plan seems to be that the restaurants will close and the company's real estate holdings and other assets will be sold. Still, the company argues that a buyer who might preserve the restaurants is possible.
"We believe that moving forward with a plan of liquidation 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 president and CEO Christopher J. Pappas added. "The Plan also continues to provide for the potential to place the restaurant operations with well-capitalized owners moving forward."
Luby's potential closure has triggered a wave of nostalgia for its classic comfort food, unpretentious atmosphere, and affordable prices. Odes to its staple dishes — the square-shaped fried fish, chicken fried steak, and mac and cheese are all fan favorites — have been circulating online. Texas Monthly executive editor Mimi Schwartz penned a personal essay about her deep connection to the restaurant's location in the heart of Houston.
"Our Luby’s was located right between the nexus of Montrose and River Oaks and the old Fourth Ward, so it always had an eclectic crowd of straight and gay, rich and poor, old and young, Black, white, and just about everybody else you could imagine, including Houston cops and down-on-their-luck types who had scraped together enough money for dinner and dessert," Schwartz writes.
Diners still have time to make another visit or two. Currently, 13 Luby's locations are open in Houston, plus additional outposts in Katy, Stafford, The Woodlands, Cypress, and Conroe. The company has locations across Texas, including Austin, Dallas, Fort Worth, and its original home of San Antonio.
Stockholders will be asked to approve other provisions, including whether to eliminate the company's "poison pill" rights agreement, shrink the size of the board of directors, and permit actions of stockholders by written consent. The board of director has already unanimously approved all of the special recommendations.
Duff & Phelps Securities, LLC acted as financial advisor, and Gibson, Dunn & Crutcher LLP served as legal advisor to the special committee.