Ruth’s (RUTH) to Buyback $60.2M in Preferred Shares; Sees $36M Hit to Q1 Net Income

Ruth’s Hospitality Group, Inc., (Nasdaq: RUTH) today announced that it has repurchased and will retire all of the outstanding shares of its Series A 10% Convertible Preferred Stock owned by affiliates of Bruckmann, Rosser, Sherrill & Co. LLC for $60.2 million in cash. The purchase price, which includes all accrued and unpaid dividends owed on the preferred stock, was funded using borrowings from the Company’s $100 million senior revolving credit facility.

As a result of the repurchase, the Company’s fully diluted common stock share count has decreased by approximately 8.6 million shares and the 10% dividend on the preferred stock, which amounted to $2.5 million in fiscal 2011, was eliminated.

The Company will record a reduction of net income available to shareholders of approximately $36 million in the first fiscal quarter of 2012 to reflect the excess of the redemption value over the carrying value of the preferred shares redeemed. Excluding this reduction of net income available to shareholders, the Company expects this transaction to be accretive to earnings. With the retirement of the preferred shares, BRS will relinquish its board seat held by Stephen Sherrill.

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