announced that it planned a fully underwritten rights issue to enable it to meet its obligations to creditors and reduce its debt load.

The announcement came after a lenthy meeting of the company's board of directors yesterday and the suspension of its shares on the Bermuda Stock Exchange yesterday morning.

KFC chief executive officer Crayton Greene said in a statement issued last night that Lines Overseas Management Ltd. will underwrite the rights issue, which will see existing shareholders offered one new share at $3 for every share held.

LOM officials were not available to comment last night on how much the share issue would raise, but it is understood KFC has about 300,000 shares issued, meaning the offer would raise more than $900,000.

KFC recently reported a $840,417 loss for the 1996 financial year and also revealed that its liabilities substantially exceeded its assets at June 30, 1996.

In 1995, the company took out a $1 million loan from the Bank of Bermuda to pay to expand its Queen Street operations and introduce a pizza-making service, which was later discontinued Wholesaler Winter Cookson, Petty Ltd. is also owed a large sum.

In the statement, Mr. Greene said: "The company's existing financial sitation necesitates an injection of new capital and some restructuring of the board.

"...LOM as underwriter will ensure that the rights issue is fully subscribed and thus the the company will receive an amount sufficient to enable the company to settle its obligations with its trade creditors and significantly reduce its bank debt.'' Mr. Greene added that shareholders will be asked at a special general meeting on January 31 to approve the rights issue and to elect an expanded board of directors. Following the SGM, KFC plans to apply to the BSX to resume trading in its old and new shares.

Before the announcement of the rights issue, Bank of Bermuda spokesman Peter Smith said the bank had no comment.

KFC suspends trading of shares -- preferred not discuss a client's debts.

KFC (Bermuda's) annual results for the year ended June 30, 1996 show a $840,417 deficit. In 1995, the company lost $426,141.

In 1996, the company, which includes Queen and Burnaby Street restaurants, had sales of $4 million and still reported an operating deficit of $90,054.

In 1995, it suffered an operating loss of $71,691 on sales of $4.1 million.

The company's stock last traded on September 19, 1996 at $14.375.

BSX vice chairman Jeffrey Conyers said that to the best of his knowledge KFC (Bermuda) had met all financial filing requirements under the exchange's domestic listing rules released April 30, 1996.

Company secretary James Pearman said earlier this week that KFC (Bermuda's) board of directors had to meet with a view to raising money.

A call to Delaware-based Kentucky Fried Chicken International Holdings Inc.

was not returned.

KFC (Bermuda) has a franchise agreement with Kentucky Fried Chicken International Holdings.

Under the franchise agreement, which expires in 2002, KFC (Bermuda) pays a monthly fee of five percent of gross sales. The company paid an initial franchise fee of $25,000 for the Burnaby Street location.

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