The operator of the Stuart Anderson's Black Angus and Cattle Company chains of steak restaurants said Tuesday it planned to file for Chapter 11 bankruptcy protection.
American Restaurant Group Inc. said in a statement it would reduce debt and accrued interest from about $202 million to about $23 million as part of an agreement with holders of more than 70% of its notes. The Los Altos-based company said about 98% of the reorganized firm's common stock would be exchanged for about $162 million in debt.
"The restructuring will dramatically de-leverage the company and provide it with significant additional capital," said Ralph Roberts, the company's chief executive, in a statement. "Thus equipped, we will implement plans to refurbish and remodel most of our restaurants and rejuvenate our brand."
Company executives did not return calls Tuesday.
The company operates 93 Black Angus and Cattle Company restaurants in 10 states, 57 in California.
Industry observers said higher menu prices at Stuart Anderson outlets and competition from new rivals contributed to the company's financial woes.
"Outback Steakhouse, Chili's and Applebee's have certainly been more aggressive, are newer and more exciting to consumers," said Hal Sieling, a Carls- bad, Calif., restaurant consultant.
Higher commodity costs, including rising beef prices, could also be working against the company, according to one analyst.
"Everybody that buys beef has had just terrible cost increases this year," said Stephen Spence of Longbow Research.