American Restaurant senior secured noteholders object to disclosure statement

By Caroline Salls

Pittsburgh, April 20 - American Restaurant Group, Inc.'s ad hoc committee of holders of its 11½% series D senior secured notes due 2006 filed an objection to the company's disclosure statement to accompany its plan of reorganization Monday with the U.S. Bankruptcy Court for the Central District of California.

The committee said the company has been repeatedly advised that it holds a "blocking position (by dollar amount) with respect to class 6 claims [and] oppose the distribution of 1.25% of the new common stock of reorganized ARG to out-of-the-money equity holders and will vote to reject the plan."

According to the filing, the disclosure statement says noteholders will receive a recovery of less than 50% of their claims.

The committee says law requires the plan to provide senior secured noteholders with deferred cash payments for the claims, but that American Restaurant's plan gives noteholders stock instead of deferred cash.

Additionally, the noteholders committee says American Restaurant and the official committee of unsecured creditors have made several misleading statements to the court about the position of the noteholders in an attempt to justify the fairness of the equity distribution.

A hearing is scheduled for April 22.

American Restaurant, a Los Altos, Calif.-based restaurant company, which runs Stuart Anderson's, a steak house chain, filed for Chapter 11 on Sept. 28, 2004. Its case number is 04-30732.

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