Company in Final Negotiations on Senior Credit Facility Amendment
STAMFORD, Conn., May 7 /PRNewswire-FirstCall/ -- Centerplate, Inc.
(Amex: CVP; TSX: CVP.un), today announced that its Board of
Directors has initiated a process to evaluate a range of capital
structure and other alternatives and has engaged UBS Investment
Bank as the company's financial advisor to assist in this process.
The company believes its current Income Deposit Security structure
may limit its ability to invest to strengthen and grow its
business. It expects the evaluation process to take up to six
months. Separately, as previously announced, the company has been
negotiating an amendment to its senior credit facility to modify,
among other things, certain restrictive financial covenants and
obtain increased flexibility on capital expenditures and
acquisitions. Based on discussions to date, the company believes it
will obtain a permanent amendment and expects to communicate the
terms of that amendment in the next few weeks. Additionally, in
order to provide enhanced financial flexibility, the Board is
likely to determine that it is in the company's best interest to
eliminate monthly dividend payments beginning in June 2008. Janet
L. Steinmayer, President and Chief Executive Officer of
Centerplate, said, "Our goal is to have a capital structure that
enhances our ability to invest in compelling projects, drive
innovation for customers and support the company's long-term growth
objectives. Centerplate is a strong franchise with an outstanding
team and we just need to find the best way to finance our growth.
We plan to work expeditiously with UBS and to communicate the
outcome of that process within the next six months." Steinmayer
continued, "Although we have experienced very strong new business
flows so far in 2008, we believe that - given the current
competitive and economic environment - it may be prudent to
eliminate the dividend beginning in June and to focus appropriate
economic resources on deepening our existing client relationships,
pursuing new ones and strengthening our company through strategic
acquisitions. We are also looking very closely at costs, in order
to protect margins." First Quarter Financial Results The company
also reported financial results for the first quarter ended April
1, 2008. Net sales of $133.2 million increased $7.9 million, or
6.3%, compared to net sales of $125.3 million for the first quarter
of 2007. The net sales increase for the first quarter of 2008 was
partly driven by new accounts, primarily the Prudential Center in
Newark, New Jersey, home of the New Jersey Devils. The sales
increase was also driven by the Super Bowl, which was held at the
University of Phoenix Stadium in Glendale, Arizona and the BCS
Championship Game and NBA All-Star Game in New Orleans. Partially
offsetting these improvements was a decline in sales at the
company's convention centers. Adjusted earnings before interest,
income taxes, depreciation and amortization (EBITDA) declined in
the first quarter to a loss of $2.0 million, compared to a gain of
$2.4 million in the first quarter of 2007, due to softness in the
convention center business, increased workers compensation costs,
the timing of new sales expenses and higher legal fees associated
with obtaining a short-term amendment to the company's senior
credit facility. "Our first quarter's results were impacted by the
challenging economic environment which contributed to fewer events
in our convention center venues," commented Steinmayer. She added,
"We are sharply focusing on managing our labor costs and working on
improving adjusted EBITDA through improved efficiencies across the
business while driving growth through new accounts, acquisitions
and joint ventures." Centerplate reported a net loss of $11.2
million, or $0.53 per share, compared to a net loss of $8.0
million, or $0.36 per share, in the first quarter of 2007. The
increased loss was due to the decline in operating income and
increased interest expense. The company is in the final stages of
the amendment process and anticipates that it will be completed in
the next few weeks. Therefore, the filing of the company's Form
10-Q for the quarter ended April 1, 2008 will be delayed and filed
on or before May 19, 2008, and we anticipate that the terms of the
amendment will be incorporated. Conference Call Centerplate will
hold a conference call today, Wednesday, May 7 at 5:30 p.m. eastern
daylight time. Interested parties may participate in the call by
dialing 877-407-8029 approximately 10 minutes before the call is
scheduled to begin. International callers should dial 201-689-8029.
An audio webcast of the conference call can also be accessed via
http://www.centerplate.com/. For individuals unable to participate
in the conference call, a telephone replay will be available from
8:00 p.m. on May 7, 2008 through midnight on May 21, 2008. The
replay can be accessed domestically by dialing 877-660-6853. For
international callers, the dial-in number is 201-612-7415. The
replay account number for the call is 252 and the pass code is
283089. About Centerplate Centerplate, Inc., with its principal
executive office in Stamford, CT, crafts and delivers extraordinary
entertainment experiences in over 130 prominent sports,
entertainment and convention center venues across North America.
Visit the company online at http://www.centerplate.com/.
Presentation of Information in this Press Release Centerplate
presents adjusted EBITDA, a non-GAAP measure, because covenants in
the indenture governing the company's subordinated notes contain
ratios based on this measure. A reconciliation of adjusted EBITDA
to net income or loss is included in the attached tables.
Forward-Looking Statements This news release includes
forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act.
These statements may involve risks and uncertainties that could
cause actual results to differ materially from those described in
such statements. Although Centerplate believes that the
expectations reflected in these forward-looking statements are
reasonable, the company can give no assurance that these
expectations will prove to have been correct or that they will
occur. Important factors beyond Centerplate's control, including
general economic conditions, the outcome of the company's
exploration of alternatives, consumer spending levels, changing
trends in our business and competitive environment, the company's
borrowing capacity and the provisions of the credit agreement,
including the outcome of negotiations to amend its terms, the
provisions of the indenture, adverse weather conditions and other
factors, as well as the risks identified in our most recent annual
report on Form 10-K and other filings with the Securities and
Exchange Commission could cause actual results to differ materially
from Centerplate's expectations. Centerplate undertakes no
obligation to update or review any forward-looking statement,
whether as a result of new information, future developments or
otherwise. Contact Information Gael Doar Director of Communications
203-975-5941 (Financial Tables Follow) CENTERPLATE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) Thirteen Weeks
Ended April 1, April 3, 2008 2007 (In thousands, except share data)
------------ ------------ Net sales $133,224 $125,333 Cost of sales
(excluding depreciation and amortization) 116,174 106,258 Selling,
general and administrative 19,209 17,200 Depreciation and
amortization 8,286 7,382 ------------ ------------ Operating loss
(10,445) (5,507) ------------ ------------ Interest expense, net
9,395 8,052 Other income (173) (502) ------------ ------------ Loss
before income taxes (19,667) (13,057) Income tax benefit (8,485)
(5,009) ------------ ------------ Net loss $(11,182) $(8,048)
============ ============ Basic and Diluted Net Loss per share with
and without conversion option $(0.53) $(0.36) ============
============ Weighted average shares outstanding with conversion
option - 4,060,997 Weighted average shares outstanding without
conversion option 20,981,813 18,463,995 ============ ============
Total weighted average shares outstanding 20,981,813 22,524,992
============ ============ Dividends declared per share $0.20 $0.20
============ ============ CENTERPLATE, INC. RECONCILIATION OF NET
LOSS TO ADJUSTED EARNINGS BEFORE INTEREST, INCOME TAXES,
DEPRECIATION, AND AMORTIZATION (UNAUDITED) Thirteen Weeks Ended
April 1, April 3, 2008 2007 ------------ ------------ (In
thousands) Net loss $(11,182) $(8,048) Income tax benefit (8,485)
(5,009) ------------ ------------ Loss before income taxes (19,667)
(13,057) Adjustments: Interest expense 9,395 8,052 Depreciation and
amortization 8,286 7,382 ------------ ------------ EBITDA (1)
$(1,986) $2,377 ============ ============ The following adjustments
to EBITDA were made to compute Adjusted EBITDA: EBITDA $(1,986)
$2,377 ------------ ------------ Adjustments: Adjusted EBITDA (1)
$(1,986) $2,377 ============ ============ (1) EBITDA is not a
measure in accordance with GAAP. EBITDA is not intended to
represent cash flows from operations as determined by GAAP and
should not be used as an alternative to income (loss) before taxes
or net income (loss) as an indicator of operating performance or to
cash flows as a measure of liquidity. We believe that EBITDA is an
important measure of the cash returned on our investment in capital
expenditures under our contracts. Adjusted EBITDA as defined in the
indenture governing our subordinated notes issued in 2003, is
determined as EBITDA as adjusted for transaction related expenses,
contract related losses, other non-cash charges, and the former
annual management fee paid to affiliates of Blackstone and GE
Capital, less any non-cash credits. We present Adjusted EBITDA
because covenants in the indenture governing our 2003 notes contain
ratios based on this measure and it is used by management to among
other things evaluate our ability to make interest and dividend
payments. CENTERPLATE, INC. SELECTED CONSOLIDATED CASH FLOW DATA
(UNAUDITED) Thirteen Weeks Ended April 1, April 3, 2008 2007
------------ ------------ (In thousands) CASH FLOWS FROM OPERATING
ACTIVITIES: Net loss $(11,182) $(8,048) Adjustments to reconcile
net loss to net cash used in operating activities: Depreciation and
amortization 8,286 7,382 Amortization of deferred financing costs
642 642 Interest earned on restricted cash (79) (115) Change in
fair value of derivative 217 672 Deferred tax benefit (8,264)
(4,734) Gain on disposition of assets (1) - Changes in assets and
liabilities 8,893 (5,125) ------------ ------------ Net cash used
in operating activities (1,488) (9,326) ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of business
(1,000) - Purchase of property and equipment (3,424) (3,306)
Proceeds from sale of property and equipment 26 2 Contract rights
acquired (2,796) (2,397) Decrease in restricted cash 3 458
------------ ------------ Net cash used in investing activities
(7,191) (5,243) ------------ ------------ CASH FLOWS FROM FINANCING
ACTIVITIES: Repayments - revolving loans (7,500) (11,000)
Borrowings - revolving loans 36,000 23,500 Net borrowings -
swingline loans (1,000) 4,000 Principal payments on long- term debt
(538) (269) Dividend payments (4,155) (4,460) Decrease in bank
overdrafts (6,243) (3,838) ------------ ------------ Net cash
provided by financing activities 16,564 7,933 ------------
------------ Effect of foreign currency translation on cash (333) -
------------ ------------ INCREASE/(DECREASE) IN CASH 7,552 (6,636)
CASH AND CASH EQUIVALENTS: Beginning of period 33,853 39,591
------------ ------------ End of period $41,405 $32,955
============ ============ CENTERPLATE, INC. SELECTED CONSOLIDATED
BALANCE SHEET DATA (UNAUDITED) April 1, January 1, 2008 2008
------------ ------------ ASSETS (in thousands) Current assets
$109,492 $95,517 Property and equipment, net 52,512 51,986 Contract
rights, net 82,829 85,183 Cost in excess of net assets acquired
41,142 41,142 Deferred financing costs, net 9,719 10,361 Other
assets 58,607 48,162 ------------ ------------ TOTAL ASSETS
$354,301 $332,351 ============ ============ LIABILITIES AND
STOCKHOLDERS' DEFICIENCY Current liabilities $151,148 $114,992
Long-term debt 222,796 223,334 Other liabilities 13,621 11,559
Total stockholders' deficiency (33,264) (17,534) ------------
------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY
$354,301 $332,351 ============ ============ DATASOURCE:
Centerplate, Inc. CONTACT: Gael Doar, Director of Communications of
Centerplate, Inc., +1-203-975-5941, Web site:
http://www.centerplate.com/
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