Hooters of America facing sale deadline

The Hooters empire, with sales of roughly $1 billion annually, has been at the center of a tussle over the estate of Robert H. Brooks, who died in 2006.

The order issued in November by judge Deirdre Edmonds ratified an agreement between Brooks' wife, Tami, and Coby Brooks, his son by a previous marriage. Coby Brooks is CEO of Hooters. Also signing off was the legal guardian of Boni Belle Brooks, the daughter Tami and Robert had together in 1999.

The legal dispute started shortly after Brooks' death. Tami Brooks accused the estate administrators, including Coby Brooks, of withholding information about the value of the estate and of being slow to pay her a monthly allowance. She turned down the $20 million allocated to her in Robert Brooks' will and is seeking one-third of the estate's value instead.

In past legal filings, Coby Brooks and the other administrators have said Tami Brooks' claims to even the $20 million should be denied, alleging that she was not living with her husband when he died.

The agreement and court order seek to break the impasse, calling for the company to be shopped to potential buyers. If that hasn't happened by the deadline, or if the "personal representatives" of the Brooks estate decide that the offers are too low, Tami Brooks will receive one-third ownership in the privately-held company.

A third of the company's sale price could potentially be worth much more than $20 million. The company's net value was appraised about three years ago as between $130 million and $160 million, after debt. Citing industry analysts, the New York Post reported recently that the company could fetch up to $250 million.

"It is apparent to me that substantial time and effort was devoted to obtaining the agreement," Edmonds wrote in the Nov. 25 order. It "represents a just and reasonable compromise of a variety of disputes among the beneficiaries."

The probate court must approve any sale. Investment firm Chanticleer Investors Inc. has the right of first refusal.

Hooters operates and franchises over 450 restaurants in 43 states and several countries including Argentina, Brazil, Columbia, Australia, Canada and China. Since its start in 1983, the company has grown to employ 25,000 people, about 15,000 of them "Hooters girls."

The company has been at the center of a web of competing claims on the Brooks estate. There has been litigation about Tami Brooks' insistence on receiving one third of the company, litigation about a trust set up by Robert Brooks, and litigation about limited liability companies owned by Brooks before he died. According to probate court personnel, the estate faces a multi-million dollar claim for unpaid fuel bills from the defunct Hooters airline. The case records have grown from a single file to a whole shelf in the court clerk's office in Horry County, S.C.

Claims on the estate total about $32 million, not counting estate tax liability. None of its assets, except for Hooters of America, has a market value sufficient to cover the debts and taxes, according to court documents.

Coby Brooks wants to keep part or all of his stake in Hooters after the sale of the company, according to the agreement.

The agreement also calls for Clemson University, which owns 13 percent of the Hooters of America trust, to use the first $1.15 million it receives from the payout on a series of opera, ballet and jazz performances at the Brooks Center for the Performing Arts. The rest of Clemson's money from the sale will go to its Robert H. Brooks Sports Science Institute. Robert Brooks was born in South Carolina, attended Clemson and became a major benefactor.

Hooters of America declined to comment.

Coby Brooks, who appeared this year on CBS' "Undercover Boss," acknowledged in February that his father's estate was seeking "partners" for Hooters. He said he wanted to tamp down "rumors" and "speculation" about a pending sale, and he insisted that the company would not go public.

Brooks wrote that the goal is to meet estate tax obligations and conform to Robert Brooks' commitments to his beneficiaries. "I am today as I always have been, completely dedicated to this brand and to what my father built alongside all of you," he wrote in a letter to employees. "I am not leaving. There may be some changes but I will not be one of them."