World’s Biggest Pizza Hut Operator Falls Further Into Distress
- Equity injections keeping franchisee from breaching covenants
- First-lien debt now trading at about 70 cents on the dollar
Photographer: Daniel Acker/Bloomberg
The largest operator of Pizza Hut restaurants in the world saw its debt plunge further into distress after second-quarter results showed the franchisee inching closer to breaching the terms of its bank credit lines.
Closely held NPC International Inc. reported in a private release to lenders earlier this month that its total debt rose to 6.9 times a measure of earnings, just below the threshold that would trigger a default under the company’s revolver, according to a person with knowledge of the matter. The ratio stood at around 6.3 times in the first quarter. NPC’s owners, including Todd Boehly’s Eldridge Industries LLC, have injected $17.5 million of cash into the business this year to help keep it in compliance with covenants, the person said.