Diedrich Coffee Plans to Sell International Operations of Gloria Jean's Brand
December 06 2004 - 8:00AM
PR Newswire (US)
Diedrich Coffee Plans to Sell International Operations of Gloria
Jean's Brand IRVINE, Calif., Dec. 6 /PRNewswire-FirstCall/ --
Diedrich Coffee, Inc. (NASDAQ:DDRX) today announced that it has
signed a definitive agreement for the sale of its Gloria Jean's
international franchise operations for $16 million in cash. There
are also license and consulting agreements, for which Diedrich
Coffee will receive $7.25 million over a period of six years. The
purchaser is Jireh International Pty. Ltd., the Gloria Jean's
master franchisee for Australia. The acquisition is subject to a
number of customary conditions and is expected to close in January
2005. Pursuant to the definitive agreement, the purchaser will
acquire certain international Gloria Jean's trademarks and Diedrich
Coffee's interest in all existing international Gloria Jean's
master franchise agreements. The terms of the individual
international master franchise agreements for each country are not
significantly affected by this transaction. After all payments have
been made to Diedrich Coffee under the license and consulting
agreements, the remainder of the Gloria Jean's trademarks
(including the U.S. trademarks) will be transferred to Jireh.
Thereafter, Diedrich Coffee's existing U.S. based Gloria Jean's
subsidiary will continue to operate, franchise and develop Gloria
Jean's Coffees locations in the United States, under a perpetual
royalty-free master franchise agreement with Jireh. As of December
6, 2004, there were 316 international Gloria Jean's franchise
units, including 225 in Australia. After the completion of this
transaction, all Gloria Jean's locations outside of the United
States will be affiliated with Jireh. The Company's 146 domestic
Gloria Jean's locations will not be affected by the sale of the
international Gloria Jean's trademarks. Diedrich Coffee operates
two other brands in the United States: Diedrich Coffee, with 31
coffeehouses primarily in Southern California, and Coffee People,
with 24 units in Portland, Oregon. As part of the transaction
Diedrich Coffee and Coffee People have agreed not to compete
internationally with Gloria Jean's for a period of two years after
the closing of this sale. During this period, the company intends
to focus on accelerated growth of all three of its brands in the
United States. In addition, Diedrich Coffee will maintain its
California based roasting operations, and its wholesale sales force
will continue selling coffee throughout the United States under all
three brands. Roger Laverty, Diedrich Coffee's Chief Executive
Officer, stated, "We believe this will be a beneficial transaction
for all parties. For Diedrich Coffee, it provides an opportunity
and resources to focus on accelerated expansion of our brands in
the United States. We see tremendous potential here in the world's
largest market for specialty coffee, and the reallocation of
capital and other resources will assist us in exploiting that
opportunity. For Jireh, it is a chance to control its own destiny
and reap the rewards from its remarkable growth. Jireh has added
over 170 new Gloria Jean's units in the past three years. For the
other international Gloria Jean's master franchisees, Jireh will
provide the leadership and commitment to the Gloria Jean's brand
that has been the basis for its success." 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. At December 6, 2004 the Company
operated 517 retail outlets, the majority of which are franchised,
located in 33 states and 14 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 financial and operating performance of the
Company's retail operations, the Company's ability to maintain
profitability over time, the successful execution of the Company's
growth strategies, franchisee's adherence to the Company's
practices, policies and procedures, 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 June 30, 2004. Information
Contact: Marty Lynch, Chief Financial Officer (949) 260-1600
DATASOURCE: Diedrich Coffee, Inc. CONTACT: Marty Lynch, Chief
Financial Officer of Diedrich Coffee, +1-949-260-1600 Web site:
http://www.diedrich.com/
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