Form 8-K Ignite Restaurant Group, For: Apr 17

---

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

---

 

FORM 8-K

 

---

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): April 17, 2015

 

---

 

IGNITE RESTAURANT GROUP, INC.

(Exact name of registrant as specified in its charter)

 

---

 

Delaware		001-35549		94-3421359
(State or other jurisdiction of Company or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

9900 Westpark Drive, Suite 300, Houston, Texas		77063
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (713) 366-7500

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

---

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

---

 

 

Item 2.01.

Completion of Acquisition or Disposition of Assets.

 

On April 17, 2015, Ignite Restaurant Group, Inc. (the “Company”) completed the sale of Romano’s Macaroni Grill to Redrock Partners, LLC (the “Purchaser”). The terms of the sale are set forth in an Equity Purchase Agreement entered into by and between the Company, Mac Parent LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Mac Parent”), the Purchaser, and Rimrock Partners LLC, an Arizona limited liability company, dated March 7, 2015. The Equity Purchase Agreement was filed as an exhibit to our Current Report on Form 8-K, dated March 7, 2015, and the related Letter Agreement was filed as an exhibit to our Current Report on Form 8-K, dated April 10, 2015. Mac Parent and its subsidiaries are in the business of operating (and franchising the right to operate) Romano’s Macaroni Grill restaurants.

 

Item 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

Ignite Restaurant Group, Inc. (the “Company”) announced that its Board of Directors has elected Brad A. Leist as Senior Vice President and Chief Financial Officer of the Company, effective as of April 17, 2015. Mr. Leist joined Ignite in 2012 and currently serves as the Senior Vice President of Accounting and Finance. Prior to joining Ignite, Mr. Leist served in a variety of positions, most recently as Vice President – Corporate Controller at Builders FirstSource, Inc. from 2004 to 2012. Mr. Leist also worked for seven years in public accounting for PricewaterhouseCoopers LLP and holds a Masters in Accounting and a Bachelors of Business Administration from Texas A&M University. Mr. Leist is 40 years old.

 

In connection with his election as Senior Vice President and Chief Financial Officer, Mr. Leist and the Company entered into an employment agreement on April 17, 2015. Pursuant to the terms of the agreement, Mr. Leist will receive an annual base salary of $275,000 and will have a targeted bonus of 50% of his base salary. In addition, Mr. Leist will be granted 25,000 stock appreciation rights and 15,000 restricted shares of the Company. In accordance with the terms of the employment agreement, Mr. Leist will also be entitled to receive severance in amount equal to his then current base salary for a period of nine months following his termination if he is terminated by the Company without cause. The employment agreement does not guarantee any set length of employment.

 

The Company also announced that its Board of Directors has elected David G. Catalano as Senior Vice President and Chief Operating Officer of the Company, effective as of April 17, 2015. Mr. Catalano currently serves as President of Brick House Tavern + Tap. Mr. Catalano's biographical information is included in the Company's proxy statement for the 2014 annual meeting of stockholders, and is incorporated by reference herein. Mr. Catalano’s annual base salary will increase to $375,000 and he will be granted 30,000 stock appreciation rights and 20,000 restricted shares of the Company. Mr. Catalano's existing employment agreement (included in his original offer letter dated February 28, 2013) with the Company will remain in effect.

 

Mr. Leist will succeed Michael J. Dixon, the Company’s current President and Chief Financial Officer, who will no longer be employed by the Company effective April 17, 2015. Ray Blanchette, the Company’s Chief Executive Officer, will resume the title of President. Under the terms of his separation agreement, Mr. Dixon will continue to provide consulting services to the Company through May 15, 2015 and will receive nine months of severance commencing on May 18, 2015 equal to his current base salary. Mr. Dixon also has 37,260 outstanding and unvested restricted shares on which vesting will be accelerated.

 

The Company also announced that Jim Mazany, President of Joe’s Crab Shack, will be leaving the Company, effective April 17, 2015. Under the terms of his separation agreement, Mr. Mazany will receive twelve months of severance equal to his current base salary. Mr. Mazany also has 34,260 outstanding and unvested restricted shares on which vesting will be accelerated.

 

In connection with the sale of Macaroni Grill, its brand president, John Gilbert, will also be leaving the Company effective April 17, 2015 and will continue to work with Macaroni Grill.

 

The foregoing description of the employment and severance agreements is only a summary and is qualified in its entirety by reference to the actual agreements, which will be attached as an exhibit to the Company’s Quarterly Report on Form 10-Q for the first quarter ended March 30, 2015. A copy of a press release announcing the election of Mr. Leist and Mr. Catalano and the departure of Mr. Dixon and Mr. Mazany is attached hereto as Exhibit 99.1 and incorporated by reference herein.

 

 

Item 9.01.

Financial Statements and Exhibits.

 

(b) Pro Forma Financial Information

 

The pro forma condensed consolidated financial information required by Item 9.01(b) of Form 8-K as of and for the fiscal year ended December 29, 2014 are attached hereto as Exhibit 99.2 and are incorporated in their entirety herein by reference.

 

(d)   Exhibits.

2.1	Equity Purchase Agreement, dated as of March 7, 2015, by and among Ignite Restaurant Group, Inc., Mac Parent LLC, Redrock Partners, LLC, and Rimrock Partners LLC (incorporated by reference from Current Report on Form 8-K, dated March 7, 2015)
2.2	Letter Agreement, dated April 10, 2015, by and among Ignite Restaurant Group, Inc., Mac Parent LLC, Redrock Partners, LLC, and Rimrock Partners LLC (incorporated by reference from Current Report on Form 8-K, dated April 10, 2015)

99.1	Press release dated April 17, 2015.

99.2	Unaudited pro forma condensed consolidated financial statements of Ignite Restaurant Group, Inc. as of and for the fiscal year ended December 29, 2014.

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: April 17, 2015

 

IGNITE RESTAURANT GROUP, INC.
By:		/s/ Raymond A. Blanchette, III
		Raymond A. Blanchette, III
		President and Chief Executive Officer

 

 

 

 

 

 

Exhibit 99.1

 

 

For Immediate Release

 

 

  

Ignite Restaurant Group, Inc. Completes Sale of Romano’s Macaroni Grill to Redrock Partners, LLC and Announces Organizational Restructuring

Restructuring to Provide Leaner, More Efficient Organization Post Sale 

 

 

Houston, TX — (BUSINESS WIRE) — April 17, 2015 — Ignite Restaurant Group, Inc. (NASDAQ: IRG) today announced that it has completed the previously announced sale of its Romano’s Macaroni Grill subsidiary to Redrock Partners, LLC. Concurrent with the close of the sale, the Company also announced the following organizational and senior management changes:

 

●

Brad Leist has been promoted to Chief Financial Officer. He will replace Michael Dixon, President and Chief Financial Officer, who will be formally leaving the Company, effective April 17, 2015, but will continue working on a consulting basis through May 15, 2015. Ray Blanchette, Chief Executive Officer, will resume the title of President;

●	David Catalano has been promoted to Chief Operating Officer, overseeing operations for both Joe’s Crab Shack and Brick House Tavern + Tap;

●	Robyn Martin, Senior Counsel, has been promoted to the role of General Counsel; and

●	Jim Mazany, President of Joe’s Crab Shack, will be leaving the Company, effective April 17, 2015.

 

“In conjunction with the sale of Macaroni Grill, we are right-sizing our operations to create a leaner, more efficient organization,” commented Ray Blanchette, President and Chief Executive Officer. “In effect, we are returning to an organizational structure that closely resembles the structure in place prior to the acquisition and reduces annual corporate overhead by over $14 million.”

 

Blanchette continued, “As part of this realignment, I’m very excited to be giving Brad, David and Robyn expanded roles within the Ignite organization. Brad has been an integral part of building and developing Ignite’s infrastructure during the last few years and I am confident in his ability to lead our finance and accounting teams and build upon the foundation established under Mike Dixon’s tenure. David has done an excellent job leading Brick House during the past year and has demonstrated a talent and a passion for creating strong operations teams. Our brands will maintain their unique identities but consolidating operations will allow us to increase our focus on the guest experience and overall operations excellence. Lastly, I am very pleased to formally recognize Robyn’s contributions and abilities with this promotion as she has been successfully performing the duties of the General Counsel position for almost a year now.”

 

Brad Leist joined Ignite in 2012 and most recently served as Senior Vice President of Accounting and Finance. Prior to joining Ignite, Brad served in a variety of positions, most recently as Vice President – Corporate Controller at Builders FirstSource, Inc. from 2004 to 2012. Brad also worked for seven years in public accounting for PricewaterhouseCoopers LLP. He holds a Masters in Accounting and a Bachelors of Business Administration from Texas A&M University.

 

 

David Catalano joined Ignite in April 2013 to lead the Macaroni Grill brand and became President of Brick House in March 2014. Prior to joining Ignite, David held senior operating roles at TGI Fridays, Hard Rock Café and Apple Gold (one of the largest Applebee’s franchise groups). In his new role, David will be responsible for all aspects of operations for Joe’s Crab Shack and Brick House Tavern + Tap.

 

Robyn Martin has most recently served as Ignite’s Senior Counsel and has been with the Company since August 2012. Robyn was a labor and employment lawyer with Adams and Reese LLP prior to joining Ignite.  Robyn earned both her bachelor’s and law degrees from St. Louis University.

 

Blanchette concluded, “I would also like to thank Mike Dixon and Jim Mazany for their numerous contributions to Ignite Restaurant Group. Mike joined us in January 2013 as Ignite planned its acquisition of Romano’s Macaroni Grill and was instrumental in completing the purchase and integrating the two businesses. Jim was one of my first hires at Ignite and has played a significant role in helping to transform Joe’s Crab Shack from a $2.2 million AUV business into a $3.2 million AUV business. I wish both of them the best in their future endeavors.”

 

Mike Dixon commented “I believe that we’ve positioned the company for success. I’m confident that the Ignite business is in good hands and well positioned and equipped to take advantage of the growth opportunities ahead.”

 

 

About Ignite Restaurant Group

Ignite Restaurant Group, Inc. (NASDAQ: IRG) owns, and operates restaurants throughout the U.S. Headquartered in Houston, Ignite's portfolio of restaurant concepts currently includes Joe's Crab Shack and Brick House Tavern + Tap. Each brand offers a variety of high-quality, chef-inspired food and beverages in a distinctive, casual, high-energy atmosphere. For more information on Ignite and its distinctive brands visit www.igniterestaurantgroup.com.

 

 

 

Investor Relations

Fitzhugh Taylor

(203) 682-8261

[email protected]

 

 Exhibit 99.2

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

On April 17, 2015, Ignite Restaurant Group, Inc. (the “Company” or “Ignite”) completed the sale of Macaroni Grill to Redrock Partners, LLC (the “Purchaser”). The aggregate acquisition price paid at closing was $8.0 million in cash.

 

The unaudited pro forma condensed consolidated financial statements as of and for the fiscal year ended December 29, 2014 were derived by applying pro forma adjustments to the historical consolidated financial statements of Ignite. The unaudited pro forma condensed consolidated balance sheet as of December 29, 2014 gives effect to the disposition as if the transaction had occurred on December 29, 2014.

 

The unaudited pro forma condensed consolidated statement of operations for the fiscal year ended December 29, 2014 gives effect to the Company’s disposition of Macaroni Grill as if it had occurred on the first day of fiscal year 2014. The pro forma adjustments related to the disposition of Macaroni Grill give effect to pro forma events that are (1) directly attributable to the disposition, (2) factually supportable, and (3) with respect to the income statement, expected to have a continuing impact on the results of operations of the Company, excluding Macaroni Grill.

 

The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the accompanying notes to the unaudited pro forma condensed consolidated financial statements and the historical consolidated financial statements and accompanying notes of Ignite included in its Annual Report on Form 10-K for the fiscal year ended December 29, 2014.

 

The unaudited pro forma condensed consolidated financial statements are presented for informational purposes only and do not purport to represent the Company’s actual financial condition or results of operations had such transactions been completed as of the dates or for the periods indicated above or that may be achieved as of any future date or for any future period. The pro forma adjustments related to the disposition are based on preliminary estimates and information available to management and are subject to change.

 

The unaudited pro forma condensed consolidated financial statements do not reflect any cost savings or operating synergies that Ignite may achieve as a result of the disposition or the costs necessary to achieve these cost savings and operating synergies.

 

 

IGNITE RESTAURANT GROUP, INC.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

December 29, 2014

(in thousands)

 

						Historical				Sale of
		Historical				Romano's				Romano's				Pro Forma
		Ignite(1)				Macaroni Grill(2)				Macaroni Grill(3)				Ignite
ASSETS
Current assets
Cash and cash equivalents		$	18,273			$	2,291			$	7,047			$	27,611
Accounts receivable, net			12,713				(4,721	)			-				7,992
Inventories			9,319				(3,471	)			-				5,848
Other current assets			11,936				(5,322	)			-				6,614
Total current assets			52,241				(11,223	)			7,047				48,065
Property and equipment, net			235,954				(43,012	)			-				192,942
Intangible assets, net			28,979				(23,039	)			-				5,940
Other assets			10,546				(5,191	)			-				5,355
Total assets		$	327,720			$	(82,465	)		$	7,047			$	252,302
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	25,381			$	(9,730	)		$	-			$	15,651
Accrued liabilities			51,509				(22,507	)			-				29,002
Current portion of debt obligations			1,650				-				-				1,650
Total current liabilities			78,540				(32,237	)			-				46,303
Long-term debt obligations			161,052				-				-				161,052
Deferred rent			24,256				(4,799	)			-				19,457
Other long-term liabilities			12,573				(10,950	)			-				1,623
Total liabilities			276,421				(47,986	)			-				228,435
Stockholders' equity
Preferred stock			-				-				-				-
Common stock			257				-				-				257
Additional paid-in capital			90,943				-				-				90,943
Accumulated deficit			(39,901	)			(34,479	)			7,047				(67,333	)
Total stockholders' equity			51,299				(34,479	)			7,047				23,867
Total liabilities and stockholders' equity		$	327,720			$	(82,465	)		$	7,047			$	252,302

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

 

 

IGNITE RESTAURANT GROUP, INC.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Fiscal Year Ended December 29, 2014

(in thousands)

 

						Historical
		Historical				Romano's				Pro Forma
		Ignite(1)				Macaroni Grill(2)				Ignite
Revenues		$	837,185			$	(333,677	)		$	503,508
Costs and expenses
Restaurant operating costs and expenses
Cost of sales			253,255				(89,848	)			163,407
Labor expenses			257,135				(114,473	)			142,662
Occupancy expenses			77,900				(38,499	)			39,401
Other operating expenses			175,513				(81,427	)			94,086
General and administrative			45,288				(6,619	)			38,669
Depreciation and amortization			33,774				(9,873	)			23,901
Pre-opening costs			2,799				-				2,799
Asset impairments and closures			12,694				(10,714	)			1,980
Loss on disposal of assets			481				859				1,340
Total costs and expenses			858,839				(350,594	)			508,245
Loss from operations			(21,654	)			16,917				(4,737	)
Interest expense, net			(12,521	)			-				(12,521	)
Loss on insurance settlements			(35	)			124				89
Loss before income taxes			(34,210	)			17,041				(17,169	)
Income tax expense			19,339				(3,126	)			16,213
Net loss		$	(53,549	)		$	20,167			$	(33,382	)
Net loss per share
Basic and diluted		$	(2.09	)						$	(1.30	)
Weighted average shares outstanding
Basic and diluted			25,659								25,659

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

 

 

IGNITE RESTAURANT GROUP, INC.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

 

 

(1)	Reflects the historical consolidated balance sheet and statement of operations of Ignite as included in its Annual Report on Form 10-K as of and for the fiscal year ended December 29, 2014.
(2)	Reflects the historical balance sheet and statement of operations of Macaroni Grill as of and for the fiscal year ended December 29, 2014.
(3)	Reflects the sale of Macaroni Grill, including receipt of gross proceeds of $8.0 million net of estimated transaction expenses of approximately $1.0 million that are directly attributable to the sale.

 

Selling price		$	8,000
Transaction expenses			(953	)
Net proceeds			7,047
Less: Carrying value of net assets sold			34,479
Net loss on sale of Macaroni Grill		$	27,432

 

There is no income tax impact included for the transactions above due to the Company having a full valuation allowance on its deferred tax assets as of December 29, 2014. The pro forma net loss on the sale is based on preliminary estimates and is subject to change.

 

 

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Alphabet stock surges 11% to record high on Q1 earnings beat, first-ever dividend
• iZafe Group's Quarterly Report January-March 2024
• Form 8.5 (EPT/RI) - Mattioli Woods