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The senior secured creditors of Boston Chicken, subject to government and bankruptcy court approvals, have accepted GRO's bid of $173.5 million, which will be comprised of cash and the assumption of certain liabilities. The sale would be completed as part of the Plan of Reorganization of Boston Chicken, Inc. and its Boston Market related subsidiaries in its Chapter 11 reorganization process. Boston Chicken's ownership interest in Einstein/Noah Bagel Corp. is not subject to the purchase agreement. Boston Chicken, which owns, operates and franchises Boston Market restaurants, filed a voluntary petition for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Arizona last year.
"Through this transaction, McDonald's will acquire both Boston Market sites and the rights to the brand," said Jack M.Greenberg, chairman and chief executive officer of McDonald's Corporation. "The brand is well-established, with excellent employees, quality products, loyal customers, and future growth potential. Selected sites, where appropriate, will help support domestic restaurant growth for McDonald's, and accelerate opportunities for Chipotle Mexican Grill and Donatos Pizza over the next few years."
"Because of the accomplishments of the employees of the Boston Market system in putting the business back onto a positive footing, we are committed to offering employment and career growth opportunities to all Boston Market restaurant and Support Center employees," said Jeffrey B. Kindler, Executive Vice President of McDonald's, who leads the McDonald's team which is managing this acquisition.
"We are very encouraged to have such a strong buyer," said J. Michael Jenkins, Chief Executive Officer of Boston Chicken. "This commitment by McDonald's Corporation is a direct result of the tremendous job our employees have done over the past year in returning the business to positive comparable store sales and positive operating cash flow. Boston Market employees will have the opportunity for continued career development within the largest and most successful restaurant company in the world."
Boston Chicken expects to file its Plan of Reorganization in December 1999, and the Purchase Agreement with GRO is expected to close in mid-year 2000, although no dates have been established by the Bankruptcy Court. With current debt obligations totaling more than $900 million in bankruptcy, Boston Chicken has publicly disclosed for the past year that holders of Boston Chicken's equity securities will retain no value under a reorganization plan and Boston Chicken anticipates that its bond holders will not retain any value under the plan. Boston Chicken's equity and debt securities will be canceled upon plan confirmation. Boston Chicken owns and operates restaurants under the Boston Market brand name. Boston Market specializes in fresh, convenient meals, featuring homestyle entrees, fresh vegetables, sandwiches, salads, and side dishes. Boston Market restaurants are located in 33 states and the District of Columbia, with the majority of sites in the Eastern and Midwestern United States.
McDonald's has restaurants serving more than 40 million customers a day in 118 countries.