Originally created 01/08/98

Flagstar company renamed



SPARTANBURG, S.C. -- Restaurant giant Flagstar Cos. Inc., which owns Denny's and other chains, has emerged from bankruptcy reorganization with a new stock issue and a new name -- Advantica Restaurant Group Inc.

The company began using the Advantica name Wednesday.

But in Miami, nine state corrections officers have filed a discrimination complaint after being turned away twice from a Denny's restaurant.

In 1994, Denny's settled a $46 million class-action lawsuit brought by black Secret Service agents and California students who claimed discrimination in separate incidents.

In emerging from bankruptcy, the signing of an agreement with a group of banks in New York for $200 million in revolving credit was the last step, said Larry Gosnell, Advantica's director of investor relations.

The reorganization plan includes 40 million shares of new common stock to be traded on the Nasdaq exchange.

About three-fourths of the stock is owned by four of the former Flagstar's senior creditors -- Loomis Sayles & Co. Inc., Magten Asset Management Corp., Moore Capital Management Inc. and Morgan Stanley & Co.

Those four have agreed to give James Adamson, Advantica's chairman and chief executive, five years to put the company in sound financial shape.

The reorganization was designed to cut in half Flagstar's $2.2 billion debt, left from a 1989 leveraged buyout.

"We could have continued to survive through the year 2000, but we weren't investing in the business, in people," Mr. Adamson said.

The company could not have survived repaying bonds totaling $270 million in 2001, $280 million in 2002, $125 million in 2003 and $722 million in 2004, he said.

In addition to Denny's, Advantica owns Carrows, Coco's, El Pollo Loco and Quincy's Family Steakhouse. It also is the largest franchisee of Hardee's fast-food restaurants.

In Miami, the officers from the Everglades Correctional Institution said they were told by a manager in the most recent incident that the restaurant had run out of food.

"All he did was lock the door, ask us to leave and say, `You guys don't look right together,"' Clifford Fortner, one of the officers, said in The Miami Herald Wednesday.

The nine officers -- six black and three white -- were told they could call the toll-free number for headquarters in Spartanburg, Mr. Fortner said.

They did -- and they also called the civil rights monitor in a 1994 Denny's discrimination case set up after a multimillion dollar settlement reached with blacks who had sued in separate allegations.

Debbie Atkins, a spokeswoman for Flagstar Cos., Denny's corporate parent, said she reported the claim to the civil rights monitor's office for investigation. She said the restaurant chain is committed to fair treatment of all customers.