Quiznos to Restructure Debt
May still file for bankruptcy protection
DENVER -- Quick-service restaurant chain Quiznos announced this week that the company has reached agreement with a significant majority of its first- and second-lien lenders on a consensual financial restructuring plan that will reduce the company's current debt substantially and provide an infusion of $150 million of new equity capital to help position Quiznos for future growth. The company expects to begin soliciting approval of the proposed transaction immediately.
The proposed transaction provides for Avenue Capital, an investment firm that currently holds a significant amount of the company's first- and second-lien debt, to become the majority owner of the company through a $150-million equity infusion and the conversion of debt to equity. Avenue's equity funding will be used to reinvest in the business and retire a portion of the company's first-lien debt.
"We are pleased to have reached this agreement, which will strengthen our balance sheet and allow us to strengthen our brand and customer experience," said Greg MacDonald, Quiznos chief executive officer. "This recapitalization will provide a path to eliminate nearly $300 million, or nearly one-third, of our current debt load and provide $75 million of new funding to help support our business initiatives and pay fees.”
MacDonald added that Quiznos expects to operate on a business-as-usual basis during this process.
Quiznos has entered into a restructuring support agreement with parties representing approximately 75% of its first-lien loans and 72% of its second-lien loans. The transaction provides for the restructuring of these loans and all of the equity interests in the company through either an out-of-court exchange offer or a prepackaged plan of reorganization under Chapter 11 of the United States Bankruptcy Code.
Denver-based Quiznos is a national chain designed for today's busy consumers who are looking for a tasty, freshly prepared alternative to traditional fast-food restaurants. Using premium ingredients, Quiznos restaurants offer creative, chef-inspired recipes for sandwiches, soups and salads.