VAN NUYS Calif. UWink Inc., parent to three technology-focused restaurants, said last week it would seek to go private and spin off its technology division to reduce expenses and focus on its restaurant business.
The company, which was founded by Chuck E. Cheese’s creator Nolan Bushnell, is offering 50 cents per share to investors who own 99 shares or fewer, known as “odd-lot” investors. UWink, which is an over-the-counter stock, said odd-lot stockholders represent about 66 percent of the shareholder base, but only about 0.04 percent of the company’s outstanding shares. In addition to the per-share buyout price, uWink has offered $20 to reimburse investors’ annual servicing costs. Eligible investors must own 99 shares or fewer as of Dec. 1, and the deadline to sell is Jan. 15.
Company officials said the 50 cents per share offer price is a 233-percent premium over the stock price prior to the Friday announcement. UWink’s stock price has plummeted this year and has hovered well below $1 in recent months. Its latest peak was Oct. 16, 2007, when it traded at $3.98 per share. The latest quote from Yahoo Finance shows the stock closing at 24 cents on Nov. 11.
The goal of the tender offer is to reduce the number of shareholders to fewer than 500, then de-register the company with the U.S. Securities and Exchange Commission and eliminate future servicing fees and the expense of public reporting requirements, said Bushnell, uWink’s chairman and chief executive. Officials contend going private will save the company an estimated $190,000 annually in reporting fees.
If successful, company officials plan to spin off uWink’s technology licensing division as a dividend to shareholders. Currently, uWink’s licensing side offers its unique table-top touch-screen hardware and software, featuring games and entertainment as well as the ability to order from the menu and pay at the table.
UWink officials hope the technology will appeal to other foodservice operators looking to reduce labor costs. In September, for example, uWink began testing the use of touch-screen terminals at Chili’s Too Margarita Bar at the Fort Lauderdale Hollywood International Airport in a deal with franchise operator Delaware North Cos. The Chili’s brand is owned by Dallas-based Brinker International Inc.
By spinning off the technology division, uWink officials said they can improve prospects of raising growth capital because technology companies and restaurant companies attract different investors. The move also would help the technology side compete more effectively, given that most competitors are private and don’t have the burden of public reporting requirements, uWink said.
Under the plan to go private, restaurant operations will remain as a separate entity under uWink Inc. Once de-registered, uWink’s stock may be quoted in the Pink Sheets Electronic Quotation System, though officials said they could not predict whether that would occur.
The uWink prototype debuted in 2006 in Woodland Hills, Calif. This year two more joined the system: uWink Hollywood opened in June and uWink Mountain View in September. Company officials say they have no plans to open more locations.
Like most in the casual-dining realm, uWink is struggling with sluggish sales. For the quarter ended Sept. 30, uWink reported a wider net loss of $1.6 million compared with a loss of $1.5 million a year ago. While net sales rose nearly 54 percent to $1.0 million, the bump came from its new restaurant openings. Sales at the company’s original uWink location fell nearly 49 percent from a year ago to $338,232.