Diedrich Coffee Announces Completion of New Growth Capital Facility
May 20 2004 - 8:12PM
PR Newswire (US)
Diedrich Coffee Announces Completion of New Growth Capital Facility
IRVINE, Calif., May 20 /PRNewswire-FirstCall/ -- Diedrich Coffee,
Inc. announced completion of the $5 million capital facility that
was approved at the December, 2003 shareholders meeting. The new
facility is intended to significantly increase capital availability
for planned growth of new retail coffee locations. Roger Laverty,
President and Chief Executive Officer stated "We are excited about
the opportunity this new growth capital facility represents for us.
Together with operating improvements we've achieved in the past
year in our company operated coffeehouses, and continued
improvement in our franchise development and support
infrastructure, we are now prepared to accelerate growth in each of
our brands. As we have previously announced, our immediate focus is
to significantly grow new Gloria Jean's franchise locations
throughout the United States, and to develop new company operated
Diedrich Coffee coffeehouses in Southern California. We will also
be upgrading our Coffee People locations and adding a new unit at
the Portland airport." Commenting on the impact of the new capital
facility on the Company's expansion plans, Chief Financial Officer
Martin Lynch added, "The Company's growth has been constrained
partially by a lack of capital for several years now. For example,
at the end of our last fiscal year we had $2,950,000 of outstanding
long-term debt, and less than $500,000 available for new capital
investments. Based on operating results this fiscal year, and the
completion of this new capital facility, our long-term debt is now
only $1 million, and we have capital availability of more than $4.2
million." The Capital Facility As previously announced, the new
capital facility is in the form of a Contingent Convertible Note
Purchase Agreement. For a period of three years the Company may, at
its election, issue Notes up to an aggregate principal amount of $5
million. Principal repayment of the unsecured Notes will be
amortized at a rate of 1.67% per month with a May 10, 2007 maturity
date for remaining un-amortized principal. The Agreement provides
for monthly payments of interest at LIBOR plus 3.30% per annum on
any outstanding borrowings, as well as a commitment fee equal to
1.0 % per annum on any unused balance of the $5 million facility.
As previously announced, Notes issued under this Agreement will be
convertible into the Company's common stock upon certain changes of
control. For Notes issued but repaid, warrants to purchase shares
will be issued with the same rights and restrictions for exercise
as existed for convertibility of the Notes at time of issuance.
Warrants are exercisable only upon a change of control and expire
on May 10, 2008. Upon entering into the Note Purchase Agreement on
May 10, 2004 the Company immediately issued a $1 million Note under
the facility, using the proceeds and other available cash to repay
all outstanding debt with Bank of the West. The Company also
amended its existing credit agreement with Bank of the West to
provide $1 million of availability, $750,000 of which is for
issuance of letters of credit, and $250,000 for general working
capital borrowings. The bank credit agreement provides for interest
at LIBOR plus 3.25%. About Diedrich Coffee With headquarters in
Irvine, California Diedrich Coffee specializes in sourcing,
roasting and selling the world's highest quality coffees. The
Company's three brands are Gloria Jean's Coffees, Diedrich Coffee,
and Coffee People. The Company's 473 retail outlets, the majority
of which are franchised, are located in 35 states and 13 foreign
countries. Diedrich Coffee also sells its coffees through more than
460 wholesale accounts including office coffee service
distributors, restaurants and specialty retailers, via mail order
and the Internet. For more information about Diedrich Coffee, call
800/354-5282, or visit the Company's Web sites at
http://www.diedrich.com/, http://www.gloriajeans.com/, or
http://www.coffeepeople.com/. Forward Looking Statements Statements
in this news release that relate to future plans, financial results
or projections, events or performance are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, and fall under the safe harbor. Actual results
and financial position could differ materially from those
anticipated in the forward-looking statements as a result of a
number of factors, including, but not limited to, the ability to
properly manage the repayment of the Company's indebtedness, the
successful management of Diedrich Coffee's growth strategy, the
impact of competition, the availability of working capital and
other risks and uncertainties described in detail under "Risk
Factors and Trends Affecting Diedrich Coffee and its Business" in
the Company's annual report on Form 10-K/A for the fiscal year
ended July 2, 2003. For further information, please contact: Marty
Lynch, Chief Financial Officer of Diedrich Coffee, Inc.,
+1-949-260-6788. DATASOURCE: Diedrich Coffee, Inc. CONTACT: Marty
Lynch, Chief Financial Officer of Diedrich Coffee, Inc.,
+1-949-260-6788 Web site: http://www.coffeepeople.com/ Web site:
http://www.gloriajeans.com/ Web site: http://www.diedrich.com/
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