Baristas Coffee, which owns six Seattle-area coffee drive-thrus staffed by “attractive female baristas in entertaining costumes,” said Tuesday it hopes to buy Tully’s Coffee when the long-struggling chain is sold in a bankruptcy auction scheduled for Jan. 3.
Baristas’ announcement didn’t give financial details of its proposal for acquiring Tully’s retail business, which includes 47 company-owned stores in Washington and California.
But in court papers filed last week, Baristas sketched out a proposal to pay about $1.5 million in cash, take on about $2.8 million in existing liabilities, and issue $6 million in unspecified “negotiable securities” to unsecured creditors and shareholders of Tully’s.
Its offer must compete with the only confirmed bidder, a Colorado private equity firm that offered to pay $1.5 million in cash and assume about $3 million in existing liabilities.
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Baristas said Tuesday it will bid through a new entity, Baristas Acquisition Partners, that includes several current Tully’s shareholders and other investors. None of them were identified.
James Day, an attorney for Tully’s, questioned at a bankruptcy-court hearing Friday whether Baristas could make a viable offer. He said the financial statement of Baristas, which trades publicly over the counter, “doesn’t look really strong.”
For the quarter ended June 30, Baristas reported total revenue of $357,000 and net income of $110,000. It had cash and equivalents of $16,000 and total assets of $865,000.
In June, Baristas agreed to pay $75,000 in back wages and damages to settle a U.S. Department of Labor lawsuit alleging it shortchanged 46 employees on minimum-wage and overtime pay. It also paid $10,000 in civil penalties to the Labor Department.
Baristas said it would continue to operate the Tully’s locations with existing employees under the Tully Coffee brand.
The Tully’s roasting and packaged coffee business is not part of the bankruptcy sale. It was sold to Green Mountain Coffee Roasters in 2009.
Baristas shares more than doubled Tuesday on news of its plans, rising 1.6 cents to close at 2.8 cents. The stock began the year at 15 cents.
With more than 209 million shares outstanding, its market capitalization is about $5.8 million.