Bob Evans Plans Strategic Transaction For Restaurant Properties; Stock Up 5%

(RTTNews) - Restaurant chain Bob Evans Farms Inc (BOBE) on Thursday said it plans to pursue a strategic transaction for a select portion of its restaurant properties.

The decision follows the announcement in March that Bob Evans had retained J.P. Morgan to assist with an evaluation of strategic alternatives for its real estate.

Bob Evans said the transaction may take the form of either a sale-leaseback or a tax-free REIT conversion and spin-off. The timing of a transaction remains subject to evaluation of conducive factors, the company said.

Chief Financial Officer Mark Hood said the company expects to conclude the assessment of alternative paths for its restaurant real estate over the next several months. The ultimate size of any transaction is expected to range from 30 to 60 percent of restaurant real estate, he said.

Hood said either of the forms of a transaction is expected to enable the company to reduce its investment in lower-return assets.

Also, Hood noted that in structuring a transaction, Bob Evans would seek to maintain flexibility to pursue a separation of the foods and restaurant segments at some point in the future.

At the end of the third fiscal quarter (January 23, 2015), Bob Evans Restaurants owned and operated 564 family restaurants.

Bob Evans Farms Inc, through its BEF Foods segment, produces and distributes refrigerated side dishes, pork sausage and a variety of refrigerated and frozen convenience food.