SOURCE: Meritage Hospitality Group Inc.

January 09, 2007 09:59 ET

Meritage to Make Application for OTCQX Listing

A New Premium Listing Service Offered for Over-The-Counter Securities

GRAND RAPIDS, MI -- (MARKET WIRE) -- January 9, 2007 -- Meritage Hospitality Group Inc. (AMEX: MHG) today announced that it intends to make application to the OTCQX -- a new premium listing service offered by Pink Sheets that is intended to provide a premier trading, quotation and disclosure venue for over-the-counter securities in the U.S. markets. This new premium tier listing will commence trading on March 5, 2007. The OTCQX provides issuers with an efficient and robust platform to list their securities and access secondary market equity. The OTCQX is specifically designed to meet the needs of smaller companies that were listed on a national exchange (such as the AMEX or Nasdaq) that are now looking for a reporting mechanism more customized to their needs.

Meritage is holding a special meeting of shareholders at 10:00 a.m. on January 23, 2007 wherein a going private transaction (by means of a 1-for-300 reverse stock split followed by a 300-for-1 forward stock split) will be voted on by Meritage shareholders. If approved, the Company will withdraw its listing of common shares on the American Stock Exchange (the AMEX) and terminate registration of its common shares with the U.S. Securities and Exchange Commission. Meritage is taking these steps to avoid the ever-increasing public company costs (including Sarbanes-Oxley Act costs) that the Company believes disproportionately affect smaller publicly traded companies.

Under the new OTCQX premium platform, the Company would, among other things, continue to provide ongoing quarterly and annual financial statements, disclose interim material events, conduct annual audits, provide management certifications, and conduct annual shareholder meetings. James R. Saalfeld, Meritage's Vice President and Chief Administrative Officer, stated, "The new premium OTCQX platform comes at a perfect time for Meritage as it would allow us to avoid the high costs of being a publicly traded company while still providing our shareholders with a premier trading, quotation and disclosure venue for our securities."

Meritage is one of the nation's premier franchise operators, currently operating 53 restaurants in two brands; Wendy's in the QSR Segment and O'Charley's in the Casual Dining Segment. Headquartered in Grand Rapids, Michigan, Meritage has approximately 2,000 employees.


Certain statements contained in this news release that are not historical facts constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created by that Act. Forward-looking statements may be identified by words such as "estimates," "anticipates," "projects," "plans," "expects," "believes," "should," and similar expressions, and by the context in which they are used. Such statements are based only upon current expectations of the Company. Any forward-looking statement speaks only as of the date made. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Meritage undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which they are made.

Statements concerning expected financial performance, business strategies and action which Meritage intends to pursue to achieve its strategic objectives, constitute forward-looking information. Implementation of these strategies and achievement of such financial performance are subject to numerous conditions, uncertainties and risk factors, which could cause actual performance to differ materially from the forward-looking statements. These include, without limitation: competition; changes in the national or local economy; changes in consumer tastes and eating habits; concerns about the nutritional quality of our restaurant menu items; concerns about consumption of beef or other menu items due to diseases including E. coli, hepatitis, and mad cow; promotions and price discounting by competitors; severe weather; changes in travel patterns; road construction; demographic trends; the cost of food, labor and energy; the availability and cost of suitable restaurant sites; the ability to finance expansion; interest rates; insurance costs; the availability of adequate managers and hourly-paid employees; directives issued by the franchisor regarding operations and menu pricing; the general reputation of Meritage's and its franchisors' restaurants; the relationship between Meritage and its franchisors; legal claims; and the recurring need for renovation and capital improvements. In addition, Meritage's expansion into the casual dining restaurant segment as a franchisee of O'Charley's will subject Meritage to additional risks including, without limitation, unanticipated expenses or difficulties in securing market acceptance of the O'Charley's restaurant brand, the ability of our management and infrastructure to successfully implement the O'Charley's development plan in Michigan, and our limited experience in the casual dining segment. Also, Meritage is subject to extensive government regulations relating to, among other things, zoning, public health, sanitation, alcoholic beverage control, environment, food preparation, minimum and overtime wages and tips, employment of minors, citizenship requirements, working conditions, and the operation of its restaurants. Because Meritage's operations are concentrated in certain areas of Michigan, a marked decline in Michigan's economy, or in the local economies where our restaurants are located, could adversely affect our operations.

Contact Information

    James R. Saalfeld
    Vice President & Chief Administrative Officer
    Meritage Hospitality Group Inc.