Back Yard Burgers Agrees to Be Acquired by Private Equity Group

  
    
  
  
    
      Back Yard Burgers, Inc. (NASDAQ:BYBI) announced today that it has 
      entered into a definitive merger agreement with BBAC, LLC and its 
      wholly-owned subsidiary, BBAC Merger Sub, Inc. BBAC, LLC is an 
      investment partnership managed by Cherokee Advisors LLC, an 
      Atlanta-based firm, and its principal investors include Reid M. Zeising 
      of Cherokee Advisors, Pharos Capital Group, LLC, based in Nashville, 
      Tennessee, and C. Stephen Lynn, former Chairman and CEO of Shoney’s, 
      Inc. and Sonic Corp. Under the terms of the merger agreement, the 
      holders of Back Yard Burgers common stock and preferred stock will be 
      entitled to receive $6.50 per share in cash, which represents a 29% 
      premium above the closing price of $5.05 per share on June 8, 2007, the 
      last trading day before this announcement. The total value of the 
      transaction, including debt to be repaid by BBAC, is approximately $38 
      million.
    
    
      Back Yard Burgers’ Board of Directors, based 
      upon the recommendation of a special committee of independent, 
      non-management directors who negotiated the merger agreement, has 
      unanimously approved the merger agreement and has recommended that Back 
      Yard Burgers’ stockholders vote in favor of 
      the merger. Officers and directors owning approximately 26.74% of the 
      outstanding capital stock have entered into voting agreements with BBAC 
      to vote their Back Yard Burgers stock in favor of the transaction.
    
    
      The closing of the transaction is subject to, among other things, the 
      approval by the holders of a majority of the outstanding common stock 
      and preferred stock of Back Yard Burgers, voting together as a single 
      class, and to a financing contingency by BBAC. BBAC has received equity 
      and debt financing commitments for the full amount of the merger 
      consideration, subject to entering into definitive financing agreements 
      and satisfaction of other customary closing conditions. The transaction 
      is expected to be completed in the third quarter of 2007, dependent on 
      the completion of SEC filings and the timing of the Back Yard Burgers 
      stockholders meeting at which the merger will be voted upon, as well as 
      other factors. Upon completion of the transaction, Back Yard Burgers 
      will become a privately held company, and its common stock will no 
      longer be publicly traded.
    
    
      Lattie Michael, Chairman and CEO of Back Yard Burgers, said, “We 
      are very excited to be able to announce this agreement after many months 
      of discussions with BBAC. We believe this transaction brings real value 
      to our stockholders, franchisees, customers and employees. For our 
      stockholders, the $6.50 share price is significantly higher than the 
      market price of our shares over the past two years. For our franchisees, 
      the management team of BBAC, headed by Steve Lynn, has a proven track 
      record in the quick service restaurant industry for growing proprietary 
      brands. The Back Yard Burgers brand is unique in our industry, and I am 
      confident that under Steve’s leadership, the 
      brand will be taken to a much higher level. The focus on our quality 
      offerings will bring the Back Yard Burgers brand to many new customers 
      who will come to appreciate our great-tasting food, as our existing 
      customers already do.”
    
    
      Steve Lynn, CEO of BBAC, said, “We are 
      excited at the prospect of adding our team’s 
      expertise to the wonderful chain that the Back Yard Burgers family has 
      created since 1987.” Chairman of BBAC, Reid 
      M. Zeising, added, “Our acquisition of Back 
      Yard Burgers will enable us to focus on extending a great legacy brand. 
      Back Yard Burgers represents a rare combination of niche status in QSR 
      along with a strong regional growth opportunity.”
    
    
      Morgan Keegan and Company, Inc. acted as financial advisor to the Back 
      Yard Burgers Board of Directors in connection with the transaction and 
      provided a fairness opinion to the Board of Directors of Back Yard 
      Burgers.
    
    
      About Back Yard Burgers
    
    
      Back Yard Burgers operates and franchises quick-service restaurants in 
      20 states, primarily in markets throughout the Southeast region of the 
      United States. The restaurants specialize in charbroiled, freshly 
      prepared, great-tasting food. As its name implies, Back Yard Burgers 
      strives to offer the same high-quality ingredients and special care 
      typified by outdoor grilling in the backyard. Its menu features 
      made-to-order gourmet Black Angus hamburgers and chicken sandwiches 
      charbroiled over an open flame, fresh salads, chili and other specialty 
      items, including hand-dipped milkshakes, fresh-made lemonade and 
      fresh-baked cobblers.
    
    
      About BBAC, LLC
    
    
      BBAC, LLC is an Atlanta-based investment group and affiliate of Cherokee 
      Advisors, LLC. BBAC’s board of managers 
      representing 60 years of combined restaurant and retail experience is 
      leading this effort: Reid M. Zeising, Managing Partner of Cherokee 
      Advisors LLC, C. Stephen Lynn, former Chairman and CEO of Sonic 
      Corporation and Shoney’s Inc., J. Michael 
      McCarthy, former EVP and CFO of Waffle House, D. Robert Crants III, 
      co-founder and managing partner of Pharos Capital Group, LLC, an 
      investment advisory firm, and Dale E. Jones, managing partner, Heidrick 
      & Struggles.
    
    
      About the Transaction
    
    
      In connection with the proposed merger, Back Yard Burgers will file a 
      proxy statement with the Securities and Exchange Commission. INVESTORS 
      AND SECURITY HOLDERS ARE STRONGLY ADVISED TO READ THE PROXY STATEMENT 
      WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT 
      INFORMATION. Investors and security holders may obtain a free copy of 
      the proxy statement (when available) and other documents filed by Back 
      Yard Burgers, Inc. at the Securities and Exchange Commission’s 
      Web site at http://www.sec.gov. The 
      proxy statement and such other documents may also be obtained for free 
      by directing such request to Back Yard Burgers, Inc., Investor 
      Relations, 1657 N. Shelby Oaks Drive, Memphis, Tennessee 38134, 
      telephone: [phone] or on the investor relations page of Back Yard 
      Burgers’ website at http://www.backyardburgers.com.
    
    
      Back Yard Burgers and its directors, executive officers and certain 
      other members of its management and employees may be deemed to be 
      participants in the solicitation of proxies from its stockholders in 
      connection with the proposed merger. Information regarding the interests 
      of Back Yard Burgers’ participants in the 
      solicitation will be included in the proxy statement relating to the 
      proposed merger when it becomes available.
    
    
      Forward-looking Statements
    
    
      Certain statements contained in this press release are “forward-looking 
      statements” within the meaning of Section 27A 
      of the Securities Act of 1933, as amended, and Section 21E of the 
      Securities Exchange Act of 1934, as amended. Back Yard Burgers intends 
      these forward-looking statements to be covered by the safe harbor 
      provisions established by the Private Securities Litigation Reform Act 
      of 1995. This press release contains forward-looking statements within 
      the meaning of the Securities Exchange Act of 1934, as amended. These 
      forward-looking statements include statements regarding expectations as 
      to the completion of the merger and the other transactions contemplated 
      by the merger agreement. Investors are cautioned that forward-looking 
      statements are not guarantees of future performance or results and 
      involve risks and uncertainties that cannot be predicted or quantified 
      and, consequently, the actual performance of Back Yard Burgers may 
      differ materially from those expressed or implied by such 
      forward-looking statements. Such risks and uncertainties include, but 
      are not limited to, the following factors, as well as other factors 
      described from time to time in our reports filed with the Securities and 
      Exchange Commission (including the sections entitled “Risk 
      Factors” and “Management’s 
      Discussion and Analysis of Financial Condition and Results of Operations” 
      contained therein): the occurrence of any event, change or other 
      circumstances that could give rise to the termination of the merger 
      agreement with BBAC, LLC and BBAC Merger Sub, Inc.; the outcome of any 
      legal proceedings that may be instituted against the Company related to 
      the merger agreement; the inability to complete the merger due to the 
      failure to obtain stockholder approval for the merger or the failure to 
      satisfy other conditions to completion of the merger, including the 
      failure to obtain the necessary financing arrangements set forth in the 
      debt and equity commitment letters delivered pursuant to the merger 
      agreement; risks that the proposed transaction disrupts current plans 
      and operations; the potential difficulties in employee retention as a 
      result of the merger; and the impact of the indebtedness to be incurred 
      to finance the consummation of the merger.
    
    
      Any forward-looking statements are made pursuant to the Private 
      Securities Litigation Reform Act of 1995 and, as such, speak only as of 
      the date made. Back Yard Burgers, Inc. disclaims any obligation to 
      update the forward-looking statements. You are cautioned not to place 
      undue reliance on these forward-looking statements which speak only as 
      of the date stated, or if no date is stated, as of the date of this 
      press release.