Einstein Noah sets redemption timetable for $57 million preferreds

By Susanna Moon

Chicago, May 28 - Einstein Noah Restaurant Group, Inc. said it finalized the redemption schedule for its $57 million in series Z preferred stock held by Halpern, Denny & Co.

The company has agreed to minimum redemption amounts and redemption dates through June 30, 2010, based on a series of discussions.

Einstein Noah also amended its senior secured credit facility to expand the options for redeeming any remaining of the preferreds on June 30, 2010.

The finalized schedule requires the company to redeem $20 million of the preferreds on June 30, $3 million on Dec. 31, 2009 and $5 million on March 31, 2010.

The company may increase the redemption amounts as well as the frequency of redemptions at any time through June 30, 2010, based on the generation of free cash flow as well as the unrestricted cash balance available at that time.

Einstein Noah agreed, however, to redeem all remaining outstanding shares on June 30, 2010 through either its unrestricted cash balance or financing alternatives, which have now been enhanced and expanded under the amended credit facility.

"Today's announcement demonstrates the cooperative nature of our relationship with Halpern, Denny & Co. and should provide all of our shareholders with a higher degree of confidence that we can meet our financial obligations in a timely manner," Jeff O'Neill, the company's chief executive officer and president, said in a press release.

"We have put in place a crisp minimum payment schedule for future series Z preferred stock redemptions through June 30, 2010, and hope to make additional payments concurrent with our generation of free cash. We appreciate the support and flexibility of our lending group in facilitating changes to our credit facility during a very difficult environment at no cost to our shareholders."

As part of the agreement, Einstein Noah's senior secured credit facility was amended and expanded to permit subordinated debt and replacement equity in the form of another issue of mandatorily redeemable preferred stock, provided that neither the replacement subordinated debt nor the preferred stock is payable or redeemable prior to Dec. 28, 2012, which is six months after the due date of the credit facility.

The redemption payments include an additional redemption amount that is 250 basis points higher than the highest rate on funded debt for any of the unredeemed preferred shares after June 30. The highest rate on the company's funded debt is currently 5.52%.

Einstein Noah is a Lakewood, Colo., owner/operator, franchisor and licensor of bagel specialty restaurants.

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