Williston Holding Co., a Houston-based restaurant operator, has an agreement to acquire Kona Grill out of bankruptcy for $27.4 million, according to federal securities filings.
Williston’s CEO is Marcus Jundt, who briefly returned to Kona Grill late last year after a decadelong absence only to leave the job a few months later.
The deal is a “stalking horse bid,” essentially meaning that it is a minimum bid for an auction. Another bidder can come in and offer more for the company. Williston would receive a $1 million breakup fee if that happens.
According to federal securities filings, Williston would purchase Kona Grill for $20.3 million, plus $7.1 million in assumed liabilities.
The $20.3 million would not cover the $33.2 million in secured debt that Kona Grill had when it filed for bankruptcy protection last month.
Under the deal, Williston would acquire Kona’s remaining 27 restaurants and its other business assets.
Williston Holding Co., formerly known as Mexican Restaurants Inc., operates and franchises more than 50 restaurants in several states. Its brands include Casa Ole, Monterey’s Little Mexico, Uberrito Fresh Mex, Williston Brewing Company, and several others.
Kona filed for bankruptcy last month after a steep sales decline that followed a rapid increase in new unit development between 2013 and 2017, when the company grew from 23 locations to 46. Kona has closed 19 locations since last year. Same-store sales fell 14.1% in the third quarter last year.
Jundt, who co-founded Kona Grill and was its CEO until 2009, returned to the company last November as co-CEO. He was given the sole title by January but left the company in March.
In that short time, however, Jundt was able to blast the company’s previous management for what he called an “erosion of core values.”
He blasted overaggressive expansion, a bloated menu and decisions to eliminate a margarita and a popular happy hour promotion. “That killed our same-store sales this year,” he said at the ICR Conference.
Kona and a key member of that prior management, James Kuhn, have gone to war over some of the decisions last year.
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