F&H Acquisition Corp., parent to the Fox & Hound sports bar and Champps casual-dining chains, is nearing a bankruptcy court deal valued at more than $120 million to sell to New York-based private-equity firm Cerberus Capital Management, according to a report filed earlier this week by Dow Jones.
F&H would avoid a planned March auction under the deal, which reportedly calls for lender Cerberus Business Finance LLC to pay $14.5 million in cash in a private sale, forgive $19 million of debt and take responsibility for another $86 million of the company's debt in exchange for most of the company's assets.
“At this point, I can’t confirm the report, but we are very pleased with the progress we are making,” Rick Van Warner, spokesman for F&H Acquisition, said Tuesday.
RELATED
• Fox & Hound, Champps parent files for Ch. 11 bankruptcy
• Champps to be acquired by Fox & Hounds' parent
• More restaurant finance news
At the time of its Dec. 15 Chapter 11 filing, F&H Acquisition owned and operated 101 full-service restaurants, including 50 Fox & Hound units, 35 Champps locations and 16 Bailey’s outlets, and it also franchised 11 Champps restaurants. The Wichita, Kan.-based company blamed continuing effects of the recession and poor sales for the filing.
Since then, the Fox & Hound unit in Winston-Salem, N.C., closed in January and plans for a new Bailey’s in Farmington Hills, Mich., were put on hold.
In its Chapter 11 filing, the company listed debt of about $119 million, including $68.4 million in first-lien secured loans; $39.8 million in second-lien secured loans; and $11.2 million to landlords, trade vendors and other unsecured creditors.
Senior creditors agreed to provide a $9.6 million loan and $3.3 million in letters of credit for operations during the bankruptcy proceedings, F&H told the U.S. Bankruptcy Court in Wilmington, Del. In an undefined period before the bankruptcy filing, F&H had closed about 24 restaurants, the company told the court.
James Zielke, F&H’s chief financial officer, said in filings that “the recession has been a primary factor in the decline in the debtors’ sales, as consumers prioritized the savings of dining at home over eating out.”
The company said in filings that it had revenue of more than $218 million through September, a 5-percent dip from the same period last year.
Former chief executive Steve Johnson left the company in October 2012 and was succeeded in January 2013 by current CEO Marc Buehler.
F&H Acquisition Corp. bought the 61-unit Champps Entertainment Inc. chain for $74.8 million in October 2007. F&H’s equity sponsors in the buyout were Newcastle Partners LP, Newcastle Special Opportunity Fund II LP and Steel Partners II LP.
This story has been revised to reflect the following correction:
Correction: Feb. 12, 2014 An earlier version of this story misspelled the first name of Rick Van Warner.
Contact Ron Ruggless at [email protected].
Follow him on Twitter: @RonRuggless
