MELVILLE, N.Y. — Pizza chain Sbarro has filed for Chapter 11 bankruptcy protection. At the time of the filing the restaurant operator claimed approximately $471 million in assets and approximately $486.5 million in debts. The company's largest creditor is The Bank of New York, to which it owes $150 million.
According to the filing, Ares Management holds a majority of the company's senior debt and MidOcean owns 95 percent of its second-lien debt. Sbarro has already reached an agreement to to eliminate approximately $200 million of its debt by converting all of its second-lien debt into senior notes of equity. The remaining debt will continue to be held by the first-lien lenders, with the debt maturation being extended to the fifth anniversary of the company's emergence from bankruptcy.
MidOcean and Ares have agreed to backstop a $30 million rights offering. In addition, Sbarro is seeing court approval for a $35 million in debtor-in-possession financing that will allow it to continue day-to-day operations. Kirkland & Ellis LLP and Rothschild, Inc. are serving as legal counsel and financial advisor, respectively, during the process.
“We believe this plan represents the best opportunity for Sbarro to clear a path for future growth by restructuring its debt in an effective and timely manner,” said Nicholas McGrane, interim president and CEO of Sbarro, in a statement. “We look forward to emerging from this process as quickly as possible with a capital structure that will firmly position us for continued long-term success.”
Sbarro currently operates more than 1,000 restaurants in 42 countries. Its restaurant ownership consists of 472 company-owned locations, 555 franchised locations and 18 joint-venture locations.
— Coleman Wood