Avado Brands Emerges from Chapter 11; Company Goes Private.

MADISON, Ga. -- Today, Avado Brands of Madison, Ga., announced it has emerged from the Chapter 11 bankruptcy from which it originally filed on Feb. 4, 2004. Avado Brands is the parent company of the Don Pablo's Mexican Kitchen and Hops Grillhouse and Brewery restaurant brands.

At emergence, Avado Brands completed the process to become a privately held company and, accordingly, its common stock has been delisted from trading on the OTC Bulletin Board.

"Today marks the beginning of a 'new Avado,'" said Raymond ("Rick") P. Barbrick, president and chief executive officer of Avado Brands. "I want to thank our senior management and every team member - from the restaurant level to the home office - for their belief in this company and for their commitment to operating great restaurants for our guests in every market we serve. Together, we're building a stronger company that promises to have a very bright future."

On Feb. 4, 2004, Avado Brands filed voluntary petitions in the U.S. Bankruptcy Court for the Northern District of Texas for relief under Chapter 11 of the U.S. Bankruptcy Code. The company continued to operate the majority of its restaurants during the restructuring despite having to make the difficult decision of closing several units.

In October 2004, Barbrick was named president and chief executive officer. Barbrick, with more than 30 years' experience in the restaurant industry, is the former president and chief operating officer of Bertucci's Corporation, based in Northborough, Mass. By early 2005, Barbrick expanded his senior management team with the additions of Kurt Schnaubelt as executive vice president and chief financial officer, Robert Hogan as senior vice president of marketing and strategic planning, and William H. Marvin as vice president of purchasing. These new appointments complemented the executive team already in place: Gary Grimes, senior vice president of operations, Michael Muldoon, vice president of human resources, and Tim Ligon, vice president, controller.

Together, this senior management team has been responsible for planning and executing the company's turnaround strategy. Barbrick noted that, since February 2005, both the Don Pablo's and Hops concepts have experienced positive sales and traffic growth.

During its restructuring period, Avado received sufficient liquidity through a $60 million debtor-in-possession credit facility wholly provided by funds and accounts managed by DDJ Capital Management LLC of Wellesley, Mass. Through the conversion of its existing bonds into common stock of the reorganized company as a part of the bankruptcy process, as well as the purchase of $17.5 million of preferred stock of the company, funds and accounts managed by DDJ Capital Management will become the majority equity owner of Avado Brands. In addition to the $17.5 million of preferred stock financing, DDJ-managed funds and accounts will provide funding to the company upon emergence from bankruptcy through $22.5 million in term debt, as well as a $30 million revolving line of credit - for a total commitment of approximately $70 million. Barbrick believes DDJ's commitment gives Avado Brands even more options for the future.

"DDJ Capital Management is a strong player in the private equity capital arena. Through their financial strength, we are a well-capitalized company poised for growth. And, as a privately held company, we have more flexibility to plan our future and continue to build on the momentum we've accomplished over the last several months," he added.

David L. Goolgasian Jr., a managing director of DDJ Capital Management, also commented, "DDJ is very pleased with its partnership with Avado. We believe that the restructuring, which has substantially reduced the debt on the company's balance sheet, will allow Avado to become a more profitable enterprise. We look forward to working with Rick Barbrick and the rest of the management team to help Avado reach its full potential." Goolgasian, along with David J. Breazzano of DDJ Capital Management, have become two of the six members of the board of directors of the reorganized company.

Based in Madison, Ga., Avado Brands owns and operates 96 Don Pablo's Mexican Kitchen restaurants in 19 states and 22 Hops Restaurant and Brewery restaurants in eight states. Additional information is available at www.avado.com.

DDJ Capital Management LLC is a boutique investment manager specializing in private equity and debt financings, as well as high yield and special situations investing. Founded in 1996, the Wellesley, Mass.-based investment firm currently manages approximately $3 billion on behalf of 78 institutional clients.