Luby’s Inc. (LUB), the parent company of Luby’s Cafeterias and Fuddruckers, is liquidating and dissolving its restaurants.
The company made the decision public on Tuesday after considering all of its strategic alternatives. Ultimately, it found the weight of the coronavirus pandemic was too much to bear. Like many other establishments, its restaurant dining rooms across the U.S. were closed during the pandemic to prevent the spread of the virus.
While some restaurant dining rooms have since reopened, many still remain closed, significantly impacting Luby’s and the restaurant industry as a whole.
In June, Luby’s announced that is was seeking a sale of its assets, which it will still entertain under the liquidation plan. Now, the company will wind down its operations if approved by its stockholders in a “poison pill” vote. Luby’s said it will attempt to convert all of its assets into cash and satisfy its remaining liabilities and obligations, including its liquidation costs.
All proceeds from the liquidation will be distributed among the company’s stockholders. The company is selling off the Luby’s Cafeterias, Fuddruckers, and Luby’s Culinary Contract Services businesses in addition to its real estate properties.
“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,” Christopher J. Pappas, CEO and president of Luby’s, said in a statement Tuesday. “The plan also continues to provide for the potential to place the restaurant operations with well-capitalized owners moving forward.”
The company expects proceeds to stockholders to come in at about $92 million and $123 million from the liquidation sale. This amounts to about $3 to $4 per share. The company has over 30.7 million shares of common stock.
Shares of Luby’s were trading at $2.1601 as of 3:11 p.m. EDT Tuesday, up $1.1101 or 105.7238%.