Failed Division Folded Under Puck Umbrella
By ANDY FIXMER
Celebrity chef Wolfgang Puck is liquidating the casual dining division of Wolfgang Puck Worldwide Inc. to pay off creditors and transferring investors' shares into the parent company, according to a letter sent to shareholders.
In the Aug. 30 letter, Puck Worldwide President Rob Kautz said: "The recapitalization and wind down of (Wolfgang Puck Casual Dining Inc.) is necessary due to severe operating and financial pressures. The casual dining caf & #233;s, the sole remaining operations, were never profitable enough to pay the full cost of overhead, maintenance and depreciation."
Kautz, who has served as president since his contract as chief executive was terminated in August 2003, said in the letter that he would cease to be president "shortly." The letter said Puck had assumed the role of chief executive.
"WPCD is a private company, is insolvent, and cannot make representation to you about the potential value of the WPW stock in escrow," he wrote.
Through David Beckwith, its outside publicist, company officials declined comment. "This is all old news," he said. "There's really nothing more to say." By closing its caf & #233; restaurants, the company eliminated $12 million in lease liabilities and generated cash to pay off creditors, according to the letter, a copy of which was obtained by the Business Journal.
In December 2001, the casual dining company staved off bankruptcy by selling off Wolfgang Puck Express, a franchised upscale fast food operation, and the licensing rights of the Wolfgang Puck name to Puck Worldwide in exchange for 1.4 million shares and the forgiveness of debts.
The Express concept has since become one of the company's fastest growing segments.
Puck's Spago and Chinois restaurants are not owned by Puck Worldwide and have remained unaffected by the restructuring.
Despite the sell-off, the casual dining unit still owes $4 million, a sum that cannot be covered by the company's $1.2 million in assets and the cash generated through management and royalty fees, according to the letter.
The 1.4 million shares of Puck Worldwide stock have been put into an escrow and will be used to finance settlements with Casual Dining's creditors. Should any funds remain, the proceeds will be distributed to shareholders but that's far from certain.
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