Luby’s receives a $10 million PPP loan Chief financial officer departs from beleaguered restaurant chain
Beleaguered Luby’s Inc., the Houston cafeteria and restaurant company that in March furloughed most of its corporate staff and slashed salaries by 50 percent, has received a $10 million Paycheck Protection Program loan through Texas Capital Bank.
The loan, announced April 21, carried an interest rate of 1 percent, with principal and interest payments deferred for six months from the date of disbursement. The company also said in a statement that it intended to seek forgiveness for a portion of the loan to the extent applicable under the Coronavirus Aid, Relief and Economic Security Act.
The announcement of the loan came the day after the company, which has 78 Luby’s Cafeterias, 40 Fuddruckers Restaurants and one Cheeseburger in Paradise restaurant, said it had received a delisting notice from the New York Stock Exchange because its shares had not traded above $1 for 30 consecutive days.
“The company is reviewing all available alternatives to return to compliance with the NYSE continued listing standards,” it said in a filing with the Securities and Exchange Commission.
And last Friday, the company entered into a separation agreement with its chief financial officer, K. Scott Gray, who had been with the company since 2001 and had previously served as director of internal audit for Pappas Restaurants since 1996. Pappas Restaurants is owned by Christopher Pappas, Luby’s president and chief executive, and his brother Harris, a former Luby’s director.
The departure was made public in an April 28 SEC filing.
Gray controlled 396,174 shares of Luby’s stock, about 1.3 percent of its outstanding shares, as of Dec. 30, 2019. The former CFO, who received $342,000 in compensation last year, is to be paid $105,230.72 in 13 payments over a period of 26 weeks for a total of $1.37 million under the termination agreement. In addition to immediate vesting in various stock options and restricted stock, Gray “has agreed to release all claims against the Company and its affiliates,” according to a filing with the Securities and Exchange Commission.
A spokesman for the company did not respond to requests for comment.
At the time of the furloughs in late March, Luby’s had temporarily closed more than two-thirds of its 119 restaurants nationally. The company was operating 34 Luby’s Cafeterias and three Fuddruckers hamburger restaurants as carry-out, drive-thru and home-delivery operations. It also offered online ordering through its apps and through third-party companies such as DoorDash, Favor, GrubHub and UberEats.
Luby’s shares closed Tursday unchanged at 84 cents. It has a market cap of $25.8 million.