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CKE Makes Deal for 25% Stake in Checkers Chain

November 26, 1996|GREG JOHNSON | TIMES STAFF WRITER

CKE Restaurants Inc. on Monday expanded its reach into Eastern states with a deal designed to eventually give it a 25% stake in the financially troubled Checkers Drive-In Restaurants chain.

Earlier this month, a group led by CKE acquired $35.8 million in Checkers debt. CKE said Monday that its group had restructured the debt in exchange for warrants for 20 million shares of Checkers common stock at 75 cents per share. CKE also won three seats on the company's seven-person board of directors.

CKE, the parent company of the Carl's Jr. burger chain, hopes to use its purchasing and new-product development departments to turn around the money-losing Checkers chain. Clearwater, Fla.-based Checkers, with 500 locations in Eastern and Midwestern states, lost $24.2 million during the third quarter ended Sept. 9.

While CKE is best known for its 661 Carl's Jr. fast-food restaurants in Western states, it has also managed to turn a profit at 27 Rally's restaurants in Southern California. CKE took over operations at those restaurants from Giant Group Ltd., which has 474 Rally's restaurants nationwide.

Rally's and Checkers are similar concepts that feature limited, burger-based menus.

New board members at Checkers include: William P. Foley II, chairman of CKE and Irvine-based Fidelity National Financial Inc.; CKE Chief Operating Officer Thomas Thompson and Terry N. Christensen, a director of Giant Group.

Anaheim-based CKE's stock closed Monday at $30.625, up 37.5 cents in New York Stock Exchange trading. Checkers' shares fell 12.5 cents to $1.03 on Nasdaq.

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