StratAmerica Corp., the Salt Lake-based company owned by former Utah Jazz owner Sam D. Battistone, has agreed to sell its restaurant subsidiary, Shari's Management Corp., to a group based in Portland, Ore.
The acquiring group consists of Larry G. Hatfield, president of Shari's, and John A. Elorriaga, a prominent Portland banker and businessman. Battistone will remain on Shari's board of directors.Under the terms of the letter of intent, Battistone said the acquisition group will pay approximately $15.7 million for all of the outstanding shares of Shari's. StratAmerica's share of that amount is approximately $11.8 million, which will be in the form of about $7.3 million in cash and $4.5 million pursuant to a subordinated note.
StratAmerica's $4.5 million note will be convertible, at StratAmerica's option, into a 40 percent interest in Shari's, subject to certain terms, conditions and dilution. The transaction will be submitted for approval by StratAmerica shareholders "as soon as possible" said Battistone.
StratAmerica acquired its interest in Shari's in February 1985 with an initial investment of approximately $3 million. An additional investment of $1.5 million was made in 1986. Battistone said the sale of Shari's Management Corp. continues StratAmerica's corporate philosophy of purchasing companies that provide opportunities to use its management expertise and increase shareholder value.
He said the 40 percent option is an "extremely attractive investment" because of the expansion potential of Shari's by the new owners.
Battistone said his company intends to remain in the restaurant business through the acquisition of another restaurant chain based in Sacramento, Calif.
This chain includes two restaurant concepts, one as a licensee for Shari's Restaurants in five states that include Utah, Arizona, California, Colorado, and Wyoming.