Had it not been for an 11th hour rights offering, Kentucky Fried Chicken (Bermuda) Ltd. would not have made payroll on January 24, the company revealed.

At a special general meeting Friday, shareholders of the company approved a rights offering which generates funds to keep the company from collapsing and sets the stage for what is hoped will be a return to profitability.

The move raises about $900,000 in new capital and is being underwritten by Lines Overseas Management Ltd. (LOM) whose underwriting fee is eight percent.

Two weeks ago, LOM said it had agreed to underwrite the offering and subsequently said board of director changes, as well as tighter management, would be a part of the deal.

As part of the new board, former Bank of Bermuda president and CEO Donald Lines is now chairman of KFC (Bermuda).

At Friday's meeting, 27 shareholders representing over 70 percent of shares outstanding, voted unanimously, either in person or by proxy, for offering existing shareholders one new share for every share presently held for a price of $3 each.

KFC (Bermuda) has about 320,000 shares outstanding.

KFC (Bermuda) needs the new capital to cover losses of about $900,000 spanning the two and one-half years from June 30, 1994 to December 31, 1996 as well as obligations to creditors totaling about $650,000.

These figures are over and above $900,000 owed to the Bank of Bermuda and the company's debt to Regina Via Ltd., which owns one of the buildings in which KFC (Bermuda) is a tenant.

Debt to Regina Via and the bank is guaranteed by Regina Via and secured by the title deposit of Regina Via's title deeds.

KFC (Bermuda) also said Masters Ltd. CEO Susan Wilson, also CEO of Bermuda Computer Services Ltd., and William Thomson, a former Bank of Bermuda executive director, have joined the board of directors.

Vice president Crayton Greene takes over as president of KFC (Bermuda) replacing Ian Paton. Mr. Paton remains a director.

Wholesaler Winter Cookson Petty Ltd. chairman Llewellyn Petty and law firm Conyers, Dill & Pearman partner Richard Pearman continue as directors.

It is believed KFC (Bermuda) owes Winter Cookson Petty around $300,000.

Stepping down from the board were Hal Masters, currently a bank of Butterfield senior manager on training in the UK, and John Young of Lantana, as well as architect Ralph Marshall of Marshall, Bernardo Partnership.

The board also agreed to appoint an executive committee consisting of four board members to assume responsibility for day to day management, accounting, finance, daily reporting, personnel management and development of policies for approval by the board.

The board approved changing the company's fiscal year to end January 31 so that future earnings reporting would not be distorted by losses to date.

Once the rights issue is completed, shareholders will meet again to approve arrangements under which the executive committee would be granted an option to subscribe for 50,000 shares at a price of $3 per share for a period of five years in lieu of directors fees and any other remuneration.

Mr. Lines said, in light of the company's financial situation, steps are being taken to renegotiate company lease terms with Regina Via Ltd., The Camera Store, and T.J. Pearman & Son Ltd.

KFC (Bermuda) operates two locations in Hamilton, on Queen and Burnaby streets.

Mr. Lines said that with the changes, coupled with suppliers and landlords of the company willing to make concessions, he had every confidence in the company's ability to return to profitability.

But that it is not something that will "happen overnight,'' he said.

Operating results for the company's last two fiscal years were both abysmal and shocking.

For its fiscal year ended June 30, 1996, the company posted an operating loss of $90,054 after sales of $4 million. For the prior fiscal year, operating loss was $71,691 on sales of $4.1 million.

LOM said the rights offering's preliminary prospectus should be ready in a few days with the final prospectus completed in about ten days.

Shares in KFC (Bermuda) suspended two weeks ago pending the announcement that LOM had agreed to underwrite the rights offering, are anticipated to resume trading on the Bermuda Stock Exchange on Tuesday.

RESTAURANT EAT