Perkins & Marie Callender’s Inc., the owner or franchiser of about 600 restaurants, won court approval of $16 million in interim financing to help fund operations while in bankruptcy.
U.S. Bankruptcy Judge Kevin Gross approved the loan at a hearing today in Wilmington, Delaware, saying “there was an effort to find better terms, and these are the best.”
The company, based in Memphis, Tennessee, will seek final approval of an additional $5 million from Wells Fargo Capital Finance LLC, the agent for the lenders, for total $21 million facility, at a hearing scheduled for July 11.
The financing is “absolutely essential to kick-start” the company, Mitchel H. Perkiel, a lawyer for the company, told Gross at the hearing. The loan is “adequate and sufficient for the company to operate effectively” and to complete the restructuring in a timely manner.
The company listed assets of $290 million and debt of $441 million in yesterday’s Chapter 11 filing.
“The languishing economy, including declines in consumer confidence and sluggish consumer spending and increased commodity costs” hurt its Perkins Restaurant and Marie Callender’s chains, Jay Trungale, Perkins’s chief executive officer said in November.
The company negotiated a restructuring proposal with noteholders before seeking bankruptcy protection, according to a statement yesterday. All of the holders of 14 percent senior secured notes agreed to support the proposal as well as more than 80 percent of the holders of the 10 percent unsecured senior notes.
Under the proposal, which must be filed by July 14, Minnesota-based private equity firm Wayzata Investment Partners LLC, the holder of all of the $132 million in 14 percent senior secured notes, agreed to extend the maturity of the notes by two years and certain other amendments, according to the statement.
Unsecured creditors, including the 10 percent senior noteholders which are owed about $190 million, will receive all of the new equity in the reorganized company. Wayzata owns in excess of 80 percent of the senior unsecured notes, and will become the majority owner after the restructuring. The court must approve the plan by Oct. 21, according to a restructuring support agreement with the noteholders.
The senior unsecured notes traded at 15 cents on the dollar on June 7, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Founded in 1958 as a pancake house in Ohio, Perkins has 12,350 full- and part-time employees at restaurants in the U.S. Midwest, Florida, Pennsylvania and Canada. Buyout firm Castle Harlan Inc. acquired the company in 2005 for $245 million in cash.
In addition to its restaurants, the company sells pies, muffins, batters and other bakery products to customers including supermarkets, court filings show.
The case is In re Perkins & Marie Callender’s Inc., 11-11795, U.S. Bankruptcy Court, District of Delaware (Wilmington).