Paul Weiss, Moelis Hired by Quiznos Chain to Advise on Debt Restructuring
The law firm Paul Weiss Rifkind Wharton & Garrison LLP and investment bank Moelis & Co. were hired by Quiznos Corp., the closely held sandwich chain, to rework its finances, said a person familiar with the matter who declined to be identified because it isn’t public.
“Quiznos has hired a financial adviser to assist in working constructively with its lenders to develop a proper financial structure for the company,” the Denver-based chain said yesterday in an e-mailed statement.
“We expect these activities will not adversely impact Quiznos customers, franchise owners, employees or business partners” the company said. “We fully expect this process to drive an outcome that will help the brand grow and prosper.”
The company’s owners -- including CCMP Capital Advisors LLC, Quiznos founder Rick Schaden and Consumer Capital Partners, the private equity firm he started -- were planning to invest about $50 million of equity to help refinance debt and avoid a technical default this year, a person with knowledge of the situation said last month.
Lisa Green, a spokeswoman for Paul Weiss, and Andrea Hurst, a spokeswoman for Moelis, didn’t immediately return calls seeking comments after regular business hours yesterday.
As of last month, Quiznos was also working with Deutsche Bank AG (DBK) to offer new debt in conjunction with the equity, said three people, who asked not to be identified because the matter is private.
Quiznos faces a debt covenant test this year that it may fail if it doesn’t receive new equity, one of the people said. That could result in control of the company going to creditors, one of the people said.
The company amended debt terms last year after CCMP and Consumer Capital Partners agreed to contribute additional capital, according to a statement in April 2010. The chain has about 2,900 stores in the U.S. and 600 international locations.
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