Pancho's Mexican Buffet, Inc. Announces Definitive Agreement To Merge With Pancho's Restaurants, Inc.

Apr 02, 2001, 01:00 ET from Pancho's Mexican Buffet, Inc.

    FORT WORTH, Texas, April 2 /PRNewswire/ -- Pancho's Mexican Buffet, Inc.
 (Nasdaq:   PAMX) today announced that it has signed a definitive agreement to
 merge with Pancho's Restaurants, Inc., an affiliate of Stephen Oyster of
 Austin Texas.
     Pursuant to the merger agreement, each share of Pancho's common stock will
 be converted into the right to receive $4.60 cash per share.  Pancho's
 currently has approximately 1.5 million shares outstanding, and outstanding
 options to purchase approximately 175,000 shares.
     Pancho's Board of Directors has unanimously approved the merger.  Wells
 Fargo Van Kasper is serving as financial advisor to the Company.
     Consummation of the merger is subject to certain closing conditions,
 including the acquiring company's obtaining a commitment letter from its
 lender, pursuant to which its lender commits, subject to the terms and
 conditions contained in the commitment letter, to provide an aggregate of up
 to $6 million in cash as a senior secured credit facility.  The terms of the
 senior secured credit facility must be reasonably satisfactory to the Company.
 In addition, the acquiring company must have entered into a commitment letter
 with Mr. Oyster, pursuant to which Mr. Oyster commits to provide an amount
 equal to the aggregate amount of the merger consideration and all other fees
 and expenses required to be paid by the acquiring company in connection with
 the transactions contemplated by Merger Agreement, less the amount committed
 by the lender.  The aggregate cash amount to be provided under these
 commitment letters must be sufficient to pay the aggregate merger
 consideration and to make all other necessary payments of fees and expenses of
 the acquiring company in connection with the merger.
     Because the acquiring company has not received the commitment letters from
 its lender or from Mr. Oyster, the transaction remains subject to review by
 the acquiring company's lenders and Mr. Oyster.  Consequently, there can be no
 assurance that the merger will occur or, if it occurs, that the price per
 share will be $4.60.
     In addition, the Company may terminate the Merger Agreement if the Company
 has not received the written opinion of Wells Fargo Van Kasper on or before
 May 18, 2001, or such other date as the parties may agree upon, to the effect
 that the merger consideration is fair to the Company's stockholders from a
 financial point of view.
     The acquiring company may terminate the Merger Agreement if, (i) the
 working capital of the Company as of the end of the calendar month immediately
 prior to the filing of the Company's definitive proxy statement with the
 Securities and Exchange Commission in connection with the meeting of
 stockholders to be held to consider the approval of the Merger Agreement,
 including all expenses of the Company in connection with the transactions
 contemplated by the Merger Agreement, is less than -- (negative) $3,880,000;
 or (ii) aggregate same-store sales for the period from the beginning of fiscal
 year 2001 of the Company through the end of the calendar month immediately
 prior to Filing Date compared with the aggregate same store sales for the
 corresponding period of the preceding fiscal year has decreased by more than
 10%; or (iii) prior to the filing of the definitive proxy statement, the
 acquiring company is not able to obtain and deliver the commitment letter from
 its lender or lenders.
     The merger is expected to be completed by the end of the second quarter of
 2001, and is subject to approval by the Company's stockholders and certain
 other customary conditions.  A special meeting of the Company's stockholders
 will be scheduled in connection with seeking the approval of the Company's
 stockholders.
     "The Merger Agreement is the culmination of the efforts of our in
 investment bankers, Wells Fargo Van Kasper, working closely with our Board of
 Directors to find strategic financial alternatives for the Company to maximize
 stockholder value," said Hollis Taylor, President and Chief Executive Officer
 of the Company.  "The Company's Board of Directors concluded that the cash
 transaction with Mr. Oyster's affiliated companies offered the best financial
 alternative for the Company's stockholders."
     Stephen "Duffy" Oyster, President of Pancho's Restaurant's Inc. in
 commenting upon the approximately $7 million agreement to acquire the Company,
 said "The $4.60 per share offer is an exceptional deal for the stockholders in
 that it represents an 84% premium over Friday's (March 30) closing price of
 $2.50 per share."  He further stated: "The employees of Pancho's are dedicated
 and committed individuals working in outdated facilities.  The new company
 plans to remodel most of the existing stores along with a strategic focus on
 superior food and service."
     Stephen Oyster is a former partner of Foodmaker, Inc., where he served as
 Executive Vice President, and President of Foodmaker Realty Corp.  He has been
 an investor in real estate and restaurants in Austin, Texas since 1988.  Mr.
 Oyster expects American Commercial Capital LLC to provide approximately
 $6 million in connection with the financing of the transaction and that his
 investment company will provide the balance of the purchase price, plus
 working capital and remodeling funds.
 
     Based in Fort Worth, Pancho's Mexican Buffet, Inc. is the only publicly-
 held company offering all-you-can-eat Mexican food in a buffet-style format.
 The Company operates 48 restaurants in Texas, Arizona, Louisiana, New Mexico
 and Oklahoma.
 
     Cautionary Note Regarding Forward-Looking Statements
     This news release contains forward-looking statements within the meaning
 of the Safe Harbor Provisions of the Private Securities Litigation Reform Act
 of 1995.  Such statements are based on the current expectations and beliefs of
 management of Pancho's, Mr. Oyster, and the acquiring company are subject to a
 number of factors and uncertainties that could cause actual results to differ
 materially from those described in the forward-looking statements.  In
 particular, the following factors, among others, could cause actual results to
 differ materially from those described in the forward-looking statements:
 failure of the transaction to close due to the failure to obtain the requisite
 financing; the failure of Pancho's to obtain a fairness opinion; a decrease in
 the merger consideration amount per share of $4.60; the failure to obtain
 regulatory or other approvals; the failure of Pancho's stockholders to approve
 the merger; and those risks detailed from time to time in Pancho's reports
 filed with the SEC, including the report on Form 10-Q for the period ended
 December 31, 2000.
 
     Additional Information
     Pancho's Mexican Buffet, Inc. will file a proxy statement describing the
 proposed merger with the United States Securities and Exchange Commission
 (SEC).  We urge investors in Pancho's common stock to review the proxy
 statement and other information to be filed with the SEC because they will
 contain important information.  These documents, when filed, will be available
 without charge on the SEC's web site at www.sec.gov or from the Corporate
 Secretary of Pancho's at 3500 Noble Avenue, Fort Worth, Texas 76111 (telephone
 at 817/831-0081).  Investors should read the proxy statement carefully before
 making any voting or investment decisions.
     Pancho's and its executive officers and directors may be deemed to be
 participants in the solicitation of proxies from stockholders of Pancho's with
 respect to the transactions contemplated by the merger agreement.  Information
 regarding such officers and directors will be included in Pancho's Proxy
 Statement for its Special Meeting of Stockholders to be filed with SEC.  When
 filed, this document will be available at the SEC's website at
 http://www.sec.gov and from the Company.
 
 

SOURCE Pancho's Mexican Buffet, Inc.
    FORT WORTH, Texas, April 2 /PRNewswire/ -- Pancho's Mexican Buffet, Inc.
 (Nasdaq:   PAMX) today announced that it has signed a definitive agreement to
 merge with Pancho's Restaurants, Inc., an affiliate of Stephen Oyster of
 Austin Texas.
     Pursuant to the merger agreement, each share of Pancho's common stock will
 be converted into the right to receive $4.60 cash per share.  Pancho's
 currently has approximately 1.5 million shares outstanding, and outstanding
 options to purchase approximately 175,000 shares.
     Pancho's Board of Directors has unanimously approved the merger.  Wells
 Fargo Van Kasper is serving as financial advisor to the Company.
     Consummation of the merger is subject to certain closing conditions,
 including the acquiring company's obtaining a commitment letter from its
 lender, pursuant to which its lender commits, subject to the terms and
 conditions contained in the commitment letter, to provide an aggregate of up
 to $6 million in cash as a senior secured credit facility.  The terms of the
 senior secured credit facility must be reasonably satisfactory to the Company.
 In addition, the acquiring company must have entered into a commitment letter
 with Mr. Oyster, pursuant to which Mr. Oyster commits to provide an amount
 equal to the aggregate amount of the merger consideration and all other fees
 and expenses required to be paid by the acquiring company in connection with
 the transactions contemplated by Merger Agreement, less the amount committed
 by the lender.  The aggregate cash amount to be provided under these
 commitment letters must be sufficient to pay the aggregate merger
 consideration and to make all other necessary payments of fees and expenses of
 the acquiring company in connection with the merger.
     Because the acquiring company has not received the commitment letters from
 its lender or from Mr. Oyster, the transaction remains subject to review by
 the acquiring company's lenders and Mr. Oyster.  Consequently, there can be no
 assurance that the merger will occur or, if it occurs, that the price per
 share will be $4.60.
     In addition, the Company may terminate the Merger Agreement if the Company
 has not received the written opinion of Wells Fargo Van Kasper on or before
 May 18, 2001, or such other date as the parties may agree upon, to the effect
 that the merger consideration is fair to the Company's stockholders from a
 financial point of view.
     The acquiring company may terminate the Merger Agreement if, (i) the
 working capital of the Company as of the end of the calendar month immediately
 prior to the filing of the Company's definitive proxy statement with the
 Securities and Exchange Commission in connection with the meeting of
 stockholders to be held to consider the approval of the Merger Agreement,
 including all expenses of the Company in connection with the transactions
 contemplated by the Merger Agreement, is less than -- (negative) $3,880,000;
 or (ii) aggregate same-store sales for the period from the beginning of fiscal
 year 2001 of the Company through the end of the calendar month immediately
 prior to Filing Date compared with the aggregate same store sales for the
 corresponding period of the preceding fiscal year has decreased by more than
 10%; or (iii) prior to the filing of the definitive proxy statement, the
 acquiring company is not able to obtain and deliver the commitment letter from
 its lender or lenders.
     The merger is expected to be completed by the end of the second quarter of
 2001, and is subject to approval by the Company's stockholders and certain
 other customary conditions.  A special meeting of the Company's stockholders
 will be scheduled in connection with seeking the approval of the Company's
 stockholders.
     "The Merger Agreement is the culmination of the efforts of our in
 investment bankers, Wells Fargo Van Kasper, working closely with our Board of
 Directors to find strategic financial alternatives for the Company to maximize
 stockholder value," said Hollis Taylor, President and Chief Executive Officer
 of the Company.  "The Company's Board of Directors concluded that the cash
 transaction with Mr. Oyster's affiliated companies offered the best financial
 alternative for the Company's stockholders."
     Stephen "Duffy" Oyster, President of Pancho's Restaurant's Inc. in
 commenting upon the approximately $7 million agreement to acquire the Company,
 said "The $4.60 per share offer is an exceptional deal for the stockholders in
 that it represents an 84% premium over Friday's (March 30) closing price of
 $2.50 per share."  He further stated: "The employees of Pancho's are dedicated
 and committed individuals working in outdated facilities.  The new company
 plans to remodel most of the existing stores along with a strategic focus on
 superior food and service."
     Stephen Oyster is a former partner of Foodmaker, Inc., where he served as
 Executive Vice President, and President of Foodmaker Realty Corp.  He has been
 an investor in real estate and restaurants in Austin, Texas since 1988.  Mr.
 Oyster expects American Commercial Capital LLC to provide approximately
 $6 million in connection with the financing of the transaction and that his
 investment company will provide the balance of the purchase price, plus
 working capital and remodeling funds.
 
     Based in Fort Worth, Pancho's Mexican Buffet, Inc. is the only publicly-
 held company offering all-you-can-eat Mexican food in a buffet-style format.
 The Company operates 48 restaurants in Texas, Arizona, Louisiana, New Mexico
 and Oklahoma.
 
     Cautionary Note Regarding Forward-Looking Statements
     This news release contains forward-looking statements within the meaning
 of the Safe Harbor Provisions of the Private Securities Litigation Reform Act
 of 1995.  Such statements are based on the current expectations and beliefs of
 management of Pancho's, Mr. Oyster, and the acquiring company are subject to a
 number of factors and uncertainties that could cause actual results to differ
 materially from those described in the forward-looking statements.  In
 particular, the following factors, among others, could cause actual results to
 differ materially from those described in the forward-looking statements:
 failure of the transaction to close due to the failure to obtain the requisite
 financing; the failure of Pancho's to obtain a fairness opinion; a decrease in
 the merger consideration amount per share of $4.60; the failure to obtain
 regulatory or other approvals; the failure of Pancho's stockholders to approve
 the merger; and those risks detailed from time to time in Pancho's reports
 filed with the SEC, including the report on Form 10-Q for the period ended
 December 31, 2000.
 
     Additional Information
     Pancho's Mexican Buffet, Inc. will file a proxy statement describing the
 proposed merger with the United States Securities and Exchange Commission
 (SEC).  We urge investors in Pancho's common stock to review the proxy
 statement and other information to be filed with the SEC because they will
 contain important information.  These documents, when filed, will be available
 without charge on the SEC's web site at www.sec.gov or from the Corporate
 Secretary of Pancho's at 3500 Noble Avenue, Fort Worth, Texas 76111 (telephone
 at 817/831-0081).  Investors should read the proxy statement carefully before
 making any voting or investment decisions.
     Pancho's and its executive officers and directors may be deemed to be
 participants in the solicitation of proxies from stockholders of Pancho's with
 respect to the transactions contemplated by the merger agreement.  Information
 regarding such officers and directors will be included in Pancho's Proxy
 Statement for its Special Meeting of Stockholders to be filed with SEC.  When
 filed, this document will be available at the SEC's website at
 http://www.sec.gov and from the Company.
 
 SOURCE  Pancho's Mexican Buffet, Inc.