Einstein Noah Restaurant Group Inc. said Tuesday it will include a possible restructuring of debt among options it is exploring, along with a possible merger or sale .
The Lakewood, Colo.-based parent of the Einstein Bros. Bagels, Noah’s New York Bagels and Manhattan Bagels brands also gave a preview of results for its Oct. 2-ended third quarter, saying net income is expected to grow by more than 20 percent over last year to about $3.4 million. The company expects revenues to rise about 2 percent to $105.5 million on a same-store sales increase of 0.2 percent.
In a presentation to lenders  posted on its website Tuesday, Einstein Noah, which operates, franchises or licenses 783 restaurants around the country, said it is seeking a $240 million first lien term loan and a $25 million revolving credit facility for a total of $265 million, which is about 4.5 times adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of $53 million.
Proceeds would be used to fund a $154 million dividend to existing shareholders and to refinance about $70 million in existing debt.
Einstein Noah announced in May that it had hired Piper Jaffray as financial advisor to explore various strategic alternatives to maximize value for stockholders, including a possible merger or sale. The company has been reporting steady improvements over the past year, cutting costs and focusing on expansion through franchising and licensing.
Einstein Bros. is the company’s largest brand, with 647 locations, of which 376 are company owned. Noah’s, which is primarily in California, has 64 locations, all company owned, and Manhattan Bagels, found mostly in the Northeast, has 72 restaurants and is almost all franchised.
The company has driven traffic with menu changes, including the addition this year of a more-healthful Smart Choices platform based on the popular Bagel Thin line, a new specialty beverage program, more value offerings and an enhanced loyalty program.
Einstein Noah has also grown catering sales with the launch of a new ordering system, an expanded call center and better packaging.
The company said most commodities have been booked through the end of the year, and the company is projecting a 2.2-percent increase in cost of goods for 2013, which will be offset by efficiency initiatives.
Expecting wheat inflation of about 5.5 percent next year, the company said it has locked in about a third of its planned buy, and coffee costs are expected to drop about 22 percent.
Jeff O’Neill, Einstein Noah’s president and chief executive, said in a statement, “We are pleased with our achievements to date in executing our asset-light expansion strategy, extending our positive comparable-sales momentum to six consecutive quarters, and cash flow improvements through our comprehensive cost savings initiatives. We believe that our financial discipline and cash flow generation capabilities support our ability to access the capital markets on favorable terms.”