A Washington state bankruptcy judge approved on Friday the sale of the Tully’s coffee shop chain to an investor group lead by “Grey’s Anatomy” star Patrick Dempsey.
The investor group, operating as Global Baristas LLC, agreed to pay $9.15 million, plus an estimated $1.8 million to assume liabilities associated with loyalty cards, for the assets of TC Global Inc., the Seattle-based company that operates 47 company-owned Tully’s units in Washington state and California. Another 70 locations are licensed or franchised.
The deal is expected to close by the end of January, allowing the company to exit from Chapter 11 bankruptcy after a little more than three months.
Global Baristas has pledged to keep the 47 company-operated locations open, with more than 500 employees retaining their jobs and benefits without the need to re-apply or interview.
In an unusual move, creditors are scheduled to receive 100 cents on the dollar under the deal, and, though details are still being worked out, shareholders are likely to receive some return on investment, company officials said.
Scott Pearson, TC Global’s president and chief executive, said Monday the auction result was a “huge win” for the coffeehouse brand and that restructuring efforts were already paying off.
Pearson, who said the new owners have asked him to stay on, said the retail operation saw a profitable month of November, disregarding the financial burdens of the bankruptcy itself.
With new well-funded owners, Tully’s coffee shops will be able to move into the next phase of “renewing, reinvigorating and renovating if necessary,” Pearson said. “It’s been a long time since we’ve had capital to invest in the stores themselves. We want to ensure we are optimizing on our execution in the field,” he added.
TC Global filed for Chapter 11 bankruptcy on Oct. 10, closing 19 unprofitable locations.
The sale of TC Global does not impact the wholesale and online Tully’s Coffee business and brand, which were purchased by Green Mountain Coffee Roasters Inc. in 2009.
The battle over the coffee shop chain was a rancorous one over the past few months. Initially, investment group Kachi Partners, operating under the entity Jonah Retail Holdings LLC and later as Neon T Coffee Shops LLC, offered $4.3 million in what became the stalking horse bid.
Later, Dempsey’s group was selected as the best offer, but that decision was vigorously disputed in court by other bidders, including Starbucks Corp., which wanted 13 company-owned and 12 licensed Tully’s locations to convert to its brand. AgriNurture, a group from the Philippines, wanted the remaining company locations, and, together, those bids totaled a reported $10.56 million.
In December, Seattle-based Baristas Coffee Company Inc. said it planned to make a bid for Tully’s, but the operator of a chain of drive thru “sex-presso” units never formally made an offer.
After the hearing late Friday, Dempsey, who last week visited Tully’s stores while in town for the auction, Tweeted: “We won!!! We won!!! Thank you Seattle! See you soon!”
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