Naugles Shareholders Endorse Collins Deal

As expected, shareholders of Naugles Inc. approved a deal with Los Angeles-based Collins Foods International Inc. in which the Orange-based operator of about 170 Mexican-American fast-food restaurants will issue 23 million shares of preferred stock to Collins in return for 111 of Collins’ Kentucky Fried Chicken restaurants--all in Southern California. The deal boosts Collins’ ownership of the company to 91.8% from 50.1%.

The agreement also calls for Collins to guarantee a $3-million revolving line of credit to help Naugles meet working capital requirements, said Chris Thomas, vice president of finance for Collins.

Nearly two-thirds of Naugles’ eligible shareholders voted to approve the deal, voting 1.36 million of the 2.19 million shares not owned by Collins. Of the other shares, 35,000 were voted against the proposal and the rest were not voted. Collins voted its shares after the minority shareholders approved the deal.

Naugles, which posted a net loss of $31.4 million in the 1986 fiscal year ended June 30, has been operating under Collins Foods’ guidance since April, when it signed a management consulting agreement with a Collins subsidiary for operating and marketing management.