J. Alexander’s Holdings, Inc. Announces Termination of Consulting Agreement with Black Knight Advisory Services, LLC
November 30 2018 - 8:23AM
Business Wire
Updates Guidance for Fiscal 2018 to Reflect
Contract Termination Costs
J. Alexander’s Holdings, Inc. (NYSE: JAX) (the “Company”), owner
and operator of a collection of restaurants which includes J.
Alexander’s, Redlands Grill, Stoney River Steakhouse and Grill and
selected other restaurants, today announced the termination of its
Management Consulting Agreement (the “Consulting Agreement”) with
Black Knight Advisory Services, LLC (“Black Knight”) and updated
selected financial guidance relative to fiscal 2018 to reflect the
impact of terminating the Consulting Agreement.
Black Knight Consulting Agreement Terminated
On November 30, 2018, the Company terminated its Consulting
Agreement with Black Knight, which had been entered into in
September 2015, in connection with the Company’s separation from
Fidelity National Financial, Inc. (NYSE: FNF) (the “Spin-off”).
Pursuant to the termination provisions of the Consulting Agreement,
the termination of the Consulting Agreement will require a cash
payment of $4,560,000 to Black Knight that will eliminate the
Company’s obligation to pay Black Knight 3.0% of the Company’s
Adjusted EBITDA for the remaining 6.8 year term of the Consulting
Agreement. The Company will also be required to make a separate
cash payment of approximately $700,000 to Black Knight for the
pro-rata portion of the 2018 consulting fee. These obligations will
be paid in early 2019 through the use of cash on hand. In
accordance with the terms of the Consulting Agreement and the 2015
Unit Grant Agreement, also entered into in connection with the
Spin-off and pursuant to which Black Knight was granted 1,500,024
Class B profits interest units of the Company’s operating
subsidiary, J. Alexander’s Holdings, LLC (the “Grant Agreement”),
Black Knight has 90 days from the Consulting Agreement termination
date of November 30, 2018 to exercise its exchange rights relative
to the fully-vested profits interest units it holds. Under the
Grant Agreement, the profits interest units may be exchanged by
Black Knight for shares of the Company’s common stock if the market
capitalization of the Company exceeds a hurdle amount of
approximately $151,052,000 at the time of exchange. The number of
shares of Company common stock issuable on exchange will be
determined in accordance with the terms of the Grant Agreement and
the J. Alexander’s Holdings, LLC operating agreement. Should the
rights not be exercised during the 90-day window, the profits
interest units will expire unexercised. In any event, no further
shares can be issuable pursuant to the Grant Agreement following
the 90-day window. For more information relative to this
transaction, see the Company’s Current Report on Form 8-K filed on
November 30, 2018. For more information relative to the profits
interest units held by Black Knight, see the Grant Agreement and
the Second Amended and Restated Limited Liability Company Agreement
of J. Alexander’s Holdings, LLC, copies of which have been
previously filed by the Company with the Securities and Exchange
Commission.
Chairman of the Board’s Comments
“We appreciate the contributions that Bill Foley and his
associates at Black Knight Advisory Services, LLC have made to our
leadership group over the past three years,” said Frank R. Martire,
Chairman of the Board of J. Alexander’s Holdings, Inc. “We are
especially pleased that Bill remains supportive of the
Company.”
Outlook for 2018/Guidance
Our performance outlook for the items set forth below is based
on current information as of November 30, 2018. The Company does
not expect to further update its 2018 guidance as set forth below
before the fourth quarter’s earnings release. However, the
information on which the outlook is based is subject to change, and
the Company may update its full business outlook or any portion
thereof at any time for any reason.
Based upon current information, including the impact of
terminating the Consulting Agreement, the guidance for the 2018
fiscal year is as follows:
Prior Guidance Revised Full Year 2018 Net Income $7.0 – $7.5
MM $3.5 – $4.0 MM Effective tax rate (6.0%) – (2.0%) (47.0%) –
(51.0%) Basic earnings per share $0.48 – $0.51 $0.24 – $0.27
With respect to anticipated J. Alexander’s/Grills same store
sales, Stoney River Steakhouse and Grill same store sales, revenue,
Adjusted EBITDA and capital expenditures, the guidance for the 2018
fiscal year is the same as reported on November 7, 2018.
About J. Alexander’s Holdings, Inc.
J. Alexander’s Holdings, Inc. is a collection of restaurants
that focus on providing high quality food, outstanding professional
service and an attractive ambiance. The Company presently operates
46 restaurants in 16 states. The Company is headquartered in
Nashville, TN.
For additional information, visit
www.jalexandersholdings.com.
Forward‐Looking Statements
This press release issued by J. Alexander’s Holdings, Inc.
contains forward‐looking statements, which include all statements
that do not relate solely to historical or current facts, such as
statements regarding our expectations, intentions or strategies
regarding the future. These forward‐looking statements are based on
management's beliefs, as well as assumptions made by, and
information currently available to, management. Because such
statements are based on expectations as to future financial and
operating results and are not statements of fact, actual results
may differ materially from those projected and are subject to a
number of known and unknown risks and uncertainties, including the
Company’s ability to maintain satisfactory guest count levels and
maintain or increase sales and operating margins in its restaurants
under varying economic conditions; the effect of higher commodity
prices, unemployment and other economic factors on consumer demand;
increases in food input costs or product shortages and the
Company’s response to them; the number and timing of new restaurant
openings and the Company’s ability to operate them profitably;
competition within the casual dining industry and within the
markets in which our restaurants are located; adverse weather
conditions in regions in which the Company’s restaurants are
located; the effect of the termination of the Black Knight
Consulting Agreement and related payments by the Company and the
impact of the Class B profits interest units held by Black Knight
that may be exchanged for shares of Company common stock; factors
that are under the control of third parties, including government
agencies; as well as other risks and uncertainties described under
the headings “Forward‐Looking Statements,” “Risk Factors” and other
sections of the Company’s Annual Report on Form 10‐K filed with the
Securities and Exchange Commission on March 15, 2018 and subsequent
filings. The Company undertakes no obligation to update any
forward‐looking statements, whether as a result of new information,
future events or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20181130005212/en/
J. Alexander’s Holdings, Inc.Mark A. ParkeyChief Financial
Officer(615) 269‐1900
J Alexanders (NYSE:JAX)
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