Schlotzsky's, Inc. Announces Company's Progress

More Than Fifty Potential Investors Indicate Interest

After receiving inquiries from more than 50 parties, Schlotzsky's, Inc. (Other OTC:BUNZQ.PK) confirmed that a process is underway which 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 diligently 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, Inc. "We hope to receive a final bid by mid-October and then move forward with emerging from Chapter 11 and becoming a stronger company. Schlotzsky's continues to make the world's best sandwich and to rely on and appreciate the ongoing support of our customers and franchisees."

In addition, today in United States Bankruptcy Court for the Western District of Texas, San Antonio Division, U.S. Bankruptcy Judge Leif Clark approved Schlotzsky's retention of Trinity Capital to provide restructuring, corporate finance and other advisory services and the retention of Hilco Real Estate, LLC to provide consultation services on Schlotzsky's real estate portfolio, including the sale of certain Company-owned properties. The Court denied the formation of a separate franchisee committee at this time.

Schlotzsky's, Inc. filed for bankruptcy relief on August 3, 2004, in the United States Bankruptcy Court for the Western District of Texas, San Antonio Division. The Company continues to provide customers with quality sandwiches, wraps, panini, salads and soups made from quality ingredients.

Founded in Austin, Texas, in 1971, Schlotzsky's, Inc., through its wholly owned subsidiaries, is a franchisor and operator of restaurants in the fast casual sector of the restaurant industry. As of August 2, 2004, there were 511 Schlotzsky's® restaurants open and operating in 36 states, the District of Columbia and six foreign countries.

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Date Listed: 2004-09-22

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Industry: Restaurants
Category: Financial
Schlotzskys
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