After less than four months, Quiznos has emerged from bankruptcy after completing a financial restructuring, the company said Tuesday.
The company did not release details of the restructuring, but officials with the Denver-based sandwich operator said it followed the pre-packaged plan approved on May 12 by the U.S. Bankruptcy Court in Wilmington, Del.
The plan aimed to reduce the chain’s more than $570 million debt by more than $400 million. In addition, the majority stake held previously by hedge fund owner Avenue Capital Group was significantly reduced.
As a result, the controlling interest is held by a group of private equity investors, including Oaktree Capital Management, Fortress Investment Group, Caspian Capital Advisors, MSD Capital L.P. and others, the company said.
However, court documents indicate that a potential civil dispute between some of the chain’s current owners and former owners Rick and Richard Schaden remains unresolved.
The New York Post reported in March that Avenue Capital and Fortress were considering action against Rick and Richard Schaden, saying they fraudulently represented the company’s financial health.
Avenue Capital became Quiznos majority owner in 2012 after a debt-for-equity swap. At the time, the hedge fund injected about $150 million into the chain and cleared about one-third of the then $870 million debt.
In a statement Tuesday, Quiznos chief executive Stuart Mathis said the emergence from bankruptcy marks the start of a new chapter for the sandwich chain, which is almost entirely franchised.
“With our financial restructuring behind us, we now have a stronger foundation to execute our comprehensive plan to strengthen performance, revitalize the Quiznos brand and reinforce its promise as a fresh, high-quality and great-tasting alternative to traditional fast-food offerings,” he said. “We sincerely appreciate the support of our franchisees, employees and vendors, who enabled us to continue providing Quiznos customers with high-quality menu offerings and superior service throughout this process.”
The move ahead will include taking additional action to help increase sales and profitability for franchise owners, Mathis added, though he did not elaborate.
Franchisee profitability has been an ongoing problem for Quiznos, which has shrunk significantly from its heyday of 2006, when the chain had more than 5,000 units in the U.S. At the end of fiscal 2013, Quiznos had 1,450 domestic locations and about 670 international units.
According to the Nation’s Restaurant News Top 100 census, Quiznos ended fiscal 2013 with U.S. systemwide sales of $486 million, a decrease of more than 21 percent, from $617.1 million the prior year.
Franchisees earlier this year said they hoped the restructuring would bring about long-sought changes to the Quiznos business model to help struggling franchisees and stop the steady pace of domestic closures.
Contact Lisa Jennings at [email protected].
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