Industry News | September 22, 2004

Schlotzky's Seeks Lead Investor

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After receiving inquiries from more than 50 parties, Schlotzsky's, Inc. yesterday confirmed that a process is underway that could result in financial restructuring and eventual new ownership for the company. Schlotzsky's, through its investment banker Trinity Capital LLC, solicited and received more than ten preliminary indications of interest in late August. Subsequently, the board of directors and management selected certain of these potential investors to participate in further discussions and due diligence with the company based on the terms of their indications of interest and their ability to help Schlotzsky's emerge from Chapter 11 as a stronger entity.

Upon completion of the ongoing due diligence and discussions, the remaining potential investors will have the opportunity to submit a final proposal describing their plans to invest in and restructure the company. The company is pursuing a goal of identifying a final lead investor and submitting a plan to the Bankruptcy Court by early December 2004. Any plan submitted will be subject to review by Schlotzsky's creditors and shareholders and to approval by the court.

"We are very pleased with the number of offers we received and can credit the high level of preliminary interest in Schlotzsky's to the strength of our brand, our quality products, our outstanding franchisees, our customer base and our position within the market," said Sam Coats, president and CEO of Schlotzsky's. "We hope to receive a final bid by mid-October and then move forward with emerging from Chapter 11 and becoming a stronger company."