After pledging to return $20 million in Paycheck Protection loans, Ruth’s Chris Hospitality Group Inc. on Wednesday said Jefferies LLC had agreed to buy $43.5 million in common stock.
Jefferies, which plans to reoffer the shares at variable prices, also has the option for 30 days of purchasing an additional $6.5 million in Ruth’s Chris stock, the company said.
Net proceeds for the sale would be used to repay borrowings under the existing credit agreement and to strengthen the balance sheet as the steakhouse chain responds to the impact of the global coronavirus pandemic, Ruth’s Chris officials said.
During April, the dining rooms of the Winter Park, Fla.-based chain’s company-owned restaurants were closed, though takeout and delivery were available from 56 locations. Thirty company-owned units were closed entirely. Same-store sales in April declined 83.5% at company stores.
With state restrictions lifting, however, the company said dining rooms have opened in 11 company-owned locations, and more will open this summer — following new safety protocols — though Ruth’s Chris officials said they expect the majority of dining rooms to remain closed through most of the second quarter.
The company said landlords were not fully paid in April and discussions to reduce or defer rent payment are ongoing.
“With payments being delayed, landlords may terminate our leases or could take other action that restrict our ability to access or reopen our restaurants in a timely manner,” the company said in a statement.
Ruth’s Chris, which operates or franchises more than 150 Ruth’s Chris Steak House units worldwide, was among several public companies that faced a backlash after receiving Paycheck Protection Program, or PPP, loans last month, part of the federal Coronavirus Aid, Relief and Economic Security, or CARES, Act designed to support small businesses.
Treasury Department officials later said companies that received more than $2 million in loans through the program would be audited, and all borrowers would be required to certify the loans were necessary for continued operations.
Jefferies earlier this month agreed to buy $100 million in shares of Dave & Buster’s, with an option for an additional $15 million.
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