Chi-Chi’s to Review $300-Million Offer From Beverly Hills Firm

The board of Chi-Chi’s, a Mexican restaurant chain with about 130 dinner houses located mostly in the East, is expected to meet today to consider a $300-million buyout proposal made by a Beverly Hills firm.

The bid for the Louisville-based company was made by Levine, Tessler, Leichtman & Co., a privately held leveraged buyout firm formed last year.

“We’re hoping that Chi-Chi’s board approves our proposal on Tuesday and resolves this whole thing,” said Arthur Levine, the buyout firm’s chairman. The firm’s bid includes an offer of $10.125 per share for Chi-Chi’s outstanding shares and the assumption of $65 million in debt held by Chi-Chi’s, he said.

More Rumors

Chi-Chi’s has rejected buyout offers in the past. After the stock market crash in October, the company’s directors announced plans to buy back company stock. A Chi-Chi’s spokeswoman declined Monday to discuss the proposed acquisition bid.

Late last week, rumors also surfaced in the the restaurant industry that Foodmaker Inc., the San Diego-based parent of the Jack-in-the-Box restaurant chain, had made a $240-million bid for Chi-Chi’s.

“I don’t have firsthand knowledge that Foodmaker is interested (in Chi Chi’s) but there are all kinds of market rumors that (Foodmaker) is interested,” Levine said Friday.

However, Foodmaker Chairman Jack Goodall on Friday refused to comment on an earlier report that Foodmaker had made a $240-million bid for Chi-Chi’s.

Financing Question

In a curt response to a shareholder question during last Friday’s Foodmaker annual meeting, Goodall said that Foodmaker “does not comment on any acquisition activity. We just don’t comment on it.”

However, Goodall did acknowledge that Foodmaker would be interested in making an acquisition “if it would increase shareholder value.”

One fast food industry analyst wondered if Foodmaker, which is carrying $251 million in long-term debt stemming from a 1985 leveraged buyout of Foodmaker from St. Louis-based Ralston Purina, would be able to arrange the financing needed to acquire Chi-Chi’s.