Taking stock: O'Charley's execs say rebranding push paying off

Also: American Color negotiates another debt reprieve

Email | Print By Geert De Lombaerde

CEO Greg Burns today told analysts and investors at a Bear Stearns conference in New York that the systematic overhaul of O’Charley’s restaurants is topping expectations so far. The company (Ticker: CHUX) is paying $300,000 per O’Charley’s and Ninety-Nine restaurant revamp, but the work is resulting in a sales jump in the mid-to-high single digits, providing a return of more than 20 percent.

O’Charley’s leaders expect to complete 110 rehabs this year and wrap up the rebranding campaign in early 2010. They also plan to open between 20 and 30 new restaurants in the next two years.

Investors, though, continue to take a jaundiced view of O’Charley’s and other restaurants in light of the economy’s issues with mortgages and energy prices. The Dow Jones Restaurants & Bars Index is off 2 percent today and more than 15 percent since November.

Shares of O’Charley’s, which were at $16 in October, are trading below $11 today, down more than 5 percent. They are trading at their lowest levels in eight years.

Download the O’Charley’s presentation at the Bear Stearns conference here.

American Color buys more time

Troubled Brentwood-based commercial printer American Color Graphics this week negotiated another amendment to its debt covenants, its latest move to stave off a major restructuring or outright sale.

The latest deal with a group led by Special Situations Investing Group Inc. lets American Color borrow up to $8 million at a 10 percent annual interest rate over the next seven weeks. This week, it took out $3 million.

In a filing with the SEC, American Color said this latest debt deal – for which it will pay its lenders $850,000 – gives CEO Stephen Dyott and CFO Patrick Kellick enough liquidity to get to early June. If it is not compliance with its many other debt covenants then, Dyott and Kellick will have to look at drastic options, including selling all or part of the company, which lost $26.7 million on revenue of $326 million during the first nine months of its fiscal 2007.

To read American Color’s filing, click here.