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Pizzeria Uno, the chain of 200 restaurants that helped popularize the Chicago-style pizza, is the latest restaurant chain on the hot seat and could be the next private equity-backed company to file for bankruptcy protection. According to a Wall Street Journal report Wednesday, Uno Restaurant
Holdings Corp. plans to miss a bond payment on Friday, making the Boston-based company the latest
restaurant chain to dish up some bad news.
The company has a $7.5 million interest payment due on $141 million in senior secured notes, which it plans to defer and is trying to negotiate with bondholders, the Journal said, citing people familiar with the matter. The Deal has confirmed that Uno has now turned to Houlihan, Lokey, Howard & Zukin Inc. to help negotiate with the bondholders. The company faces a toxic combination all too familiar to restaurant groups: slowing sales, higher food costs and heavy debt, the Journal noted. Should it go under, something the company's CEO Louie Psallidas said isn't imminent, according to the Journal, it would also be the latest private equity-backed bankruptcy. Centre Partners took the company private in 2005. Terms were not disclosed when the deal was announced Jan. 11, but the New York and Los Angeles firm planned to use equity from its $780 million fourth fund and a then-upcoming high-yield bond offering through Banc of America Securities LLC and Jefferies & Co., sources told The Deal at the time. Other chains seeking to renegotiate with lenders, the Journal said, are Real Mex Restaurants Inc., the parent of Chevys Fresh Mex and other Mexican chains, and Perkins & Marie Calender's Inc., the parent of the comfort-food chains baring those two names. They suffer from tightened consumer spending and heavy private equity-imposed debt loads. Boca Raton, Fla.-based Sun Capital Partners Inc., a distressted investor and private equity firm that has seen more than one company slide into bankrptcy in recent months, owns Real Mex, having acquired the company in August 2006 in a secondary buyout a source pegged at $350 million, from Bruckmann, Rosser, Sherrill & Co. LLC. Chevys already had a stint in bankruptcy before Real Mex scooped it up with a $78 million bid announced in October 2004. Meanwhile, Castle Harlan Inc. owns Perkins & Marie Callender's, having acquired the company in September 2005 in a deal with a then-enterprise value of $440 million and a debt to Ebitda ratio of 5.3. Other chains with recent bankruptcy filings include: Midland Food Services LLC, a major Pizza Hut franchisee with 92 locations. The company sought protection Aug. 6 to ward off a default. It wasn't the first time it filed for protection. S&A Restaurant Corp., the parent of Bennigan's Grill & Tavern and the Steak and Ale restaurants filed Chapter 7 liqudiation on July 27. Right now, some of its franchisees are organizing to take over some of the shuttered outlets. VI Acquisition Corp. of Southfield, Mich., which is 68% owned by buyout firm Wind Point Partners and is the franchiser of the Village Inn and Bakers Square restaurant chains, filed for Chapter 11 with its subsidiary, Vicorp Restaurants Inc., on April 3, dragged down by higher food and labor costs. Other franchisees owning Church's Chicken and TGI Friday's Inc. restaurants have filed recently, while steak buffet chain and CI Capital LLC portfolio company Buffets Inc. was done in in January by acquisition-related debt, and steak house chain Roadhouse Grill Inc. flamed out in May, when a judge converted its Chapter 11 to a Chapter 7 liquidiation. See The Deal's Bankruptcy Insider database for more on recent filings and Dealwatch: PE-backed bankruptcies for more on privately held companies gone bust. - Carolyn Murphy See related: Uno Restaurant on the block See related story on Centre-Unos See related story on Sun-Real See related story on Marie Callendar's and leverage See Dealscape item on Midland Food Buffets: One helping too many Roadhouse Grill flames out Categories Deal Video
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