CONSUL RESTAURANT <CNSL> IN EXCHANGE OFFER
Consul Restaurant Corp said it began
an exchange offer for its 13 pct convertible debentures due
1992 with an aggregate principal amount of 17.5 mln dlrs.
    Consul officials told an analysts meeting that in return
for each 1,000 dlr face value of the bonds tendered, investors
will receive 10 shares of preferred stock convertible after Dec
1, 1987, into 500 shares of common. The company said the value
represents a substantial premium over the debentures' market
value, which traded at 410 dlrs per 1,000 dlr face amount on
March 13.
    Consul said the debt was taken on to finance expansion.
    James Crivits, Consul chairman, said debt service on the
outstanding debentures has cost the company 55 cts a share per
quarter and cut deeply into the company's profitability.
    For the year ended May 31, 1986, the company reported a net
loss of 1.12 dlr per share or 5.3 mln dlrs on revenues of 77.6
mln dlrs.
    Crivits said the company will report an improved but still
unprofitable third quarter ended February 28, compared to a
loss of 22 cts a share in the year-ago thrid quarter. He said
current third quarter results would be similar to 1987's
second quarter's loss of 12 cts per share.
    Crivits said the company will not produce a gain in the
fourth quarter or the full year, and said there will be a write
off in the fourth quarter for the debenture exchange offer. He
would not specify the amount of the write off.
    Robert Lamp, Consul's chief financial officer, said the
company needs to have at least 90 pct of the bonds exchanged in
the transaction to report a profit in the first quarter of
fiscal 1988. Lamp said that if the exchange is successful, the
company will report profits much higher than the three cents a
share reported in the first quarter of fiscal 1987.
    The Minneapolis-based company, which it said is the
nation's largest franchisee of Chi-Chi's family-style Mexican
restaurants, said it had the planned to expand to 80 units, but
had to abandon the effort, leaving 38 units in operation.
    The company also said the restaurants are profitable, with
profit margins increasing over last year.
 Reuter
