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Perkins Wins Court Approval of Plan Giving Wayzata Control

Perkins & Marie Callender’s Inc., the restaurant owner and franchiser, won court approval of its restructuring plan giving noteholders control of the company.

Under the reorganization plan, Minnesota-based private equity firm Wayzata Investment Partners LLC will become the majority owner of Perkins, according to a statement issued today by the company.

“The company will soon emerge from its financial and operational restructuring a leaner and stronger company, possessing a dramatically improved balance sheet,” Perkins’s chief executive officer, Jay Trungale, said in the statement.

The slumping economy cut into consumers’ discretionary spending, causing sales of Memphis, Tennessee-based Perkins to decrease and forcing it to seek protection from its creditors, according to court papers. The company listed assets of $290 million and debt of $441 million.

The company negotiated a restructuring proposal with noteholders before seeking bankruptcy protection, according to a June 13 statement. 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.

Secured Notes

Wayzata, the holder of all the $103 million in 14 percent senior secured notes, will get a new term loan in the same amount and cash for interest.

The 10 percent senior unsecured noteholders, owed about $204 million, will receive new equity in the reorganized company, or they may opt to receive cash instead of stock. Wayzata owns in excess of 80 percent of the senior unsecured notes.

The senior unsecured notes traded at 26.5 cents on the dollar as of Oct. 28, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Unsecured creditors owed more than $20 million will get 14 percent of their claims or a share of a $7 million cash pool, whichever is less, according to the plan. Unsecured creditors also have the option to choose to receive equity in lieu of the cash payment. Unsecured creditors owed more than $5 million will get a share of the new equity or may elect to reduce their claims to receive cash.

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. bought the company in 2005 for $245 million in cash.

In addition to about 600 restaurants, the company sells pies, muffins, batters and other bakery products to customers including supermarkets, court filings show. Perkins announced it would close about 58 stores as part of the restructuring.

The case is In re Perkins & Marie Callender’s Inc., 11-11795, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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