Sbarro Inc., a chain of fast-food Italian restaurants, is negotiating an offer that’s more valuable than the plan it entered bankruptcy with in April, a person familiar with the matter said.
The offer that’s being negotiated is from a “strategic” buyer, not a private equity or other financial firm, the person said.
Sbarro ended its plan-support agreement and equity commitment accord with MidOcean Partners and Ares Corporate Opportunities Fund II LP to explore “other strategic alternatives,” according to a statement today.
Sbarro, based in Melville, New York, is talking to an entity that may offer to buy the entire chain in a deal worth more than the original proposal to give itself to creditors in exchange for cutting its debt, said the person, who declined to be identified because details about the talks are private. That deal included a $30 million rights offering.
Sbarro, led by interim Chief Executive Officer Nicholas McGrane, filed for Chapter 11 bankruptcy protection on April 4. The company, which owns or franchises more than 1,000 fast-food Italian restaurants, said the eateries will operate as usual.
“We believe it is in the best interest of all stakeholders for the company to dedicate its resources to exploring all available value maximizing alternatives,” McGrane said in a statement. The company said the entity it is talking to is a “qualified bidder.” Bankruptcy courts use that term to distinguish between investors who have been cleared to participate in an auction and those who have not.
Sbarro is still negotiating with its pre-petition creditors to pursue a reorganization plan, according to the statement.
The Sbarro family founded the company as a single Italian delicatessen more than half a century ago in Brooklyn, New York, according to its website. The family opened its first mall location about a decade later. MidOcean Partners bought Sbarro in 2007.