Quiznos, one of the nation's premier quick-service restaurant chains and pioneer of the toasted sub, today announced that its senior lenders have voted overwhelmingly in favor of a "pre-packaged" restructuring plan that will reduce the Company's debt by more than $400 million. Quiznos files for prepackaged chapter 11 to execute financial restructuring.
The plan is intended to increase the Company's flexibility as it executes operational enhancements designed 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. In order to implement this pre-packaged plan, the Company today voluntarily filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in Wilmington, Delaware.
All but seven of Quiznos' nearly 2,100 restaurants are independently owned and operated by franchisees in the U.S. and 30 other countries around the world. As separate businesses, these restaurants are not a part of the Chapter 11 proceedings and are open and operating as usual. Quiznos customers can expect to continue to enjoy their favorite high-quality menu offerings. The Company expects to continue operating in the ordinary course of business throughout the restructuring process. The Company will continue working with its franchisees in the U.S. and internationally to strengthen the brand, build momentum and improve growth and profitability.
"The actions we are taking are intended to enable Quiznos to reduce our debt, execute a comprehensive plan to further enhance the customer experience, elevate the profile of the brand and help increase sales and profits for our franchise owners," said Stuart K. Mathis, Quiznos Chief Executive Officer. "We look forward to continuing to work with and support our global network of franchise owners, who are the backbone of our business."
Mathis continued, "Our business plan includes several key elements aimed at supporting our franchisees, including reducing food costs, implementing a franchise owner rebate program, in certain circumstances making loans available to franchisees for restaurant improvements, investing in advertising to improve location awareness, and providing new incentives for prospective franchisees. We are also introducing new technology at the restaurants and taking other actions to help our franchisees operate their businesses more efficiently."
In conjunction with the restructuring plan, Quiznos has received a commitment for $15 million in debtor-in-possession ("DIP") financing from its senior lenders, which, subject to Court approval, will be available to support its ongoing operations during the Chapter 11 proceedings. The Company's distribution centers are open and fulfilling orders, and Quiznos has been in touch with its key suppliers to help ensure that products will continue to be delivered to franchisees in a timely fashion. Because the Company has already received the requisite approvals for its pre-packaged restructuring plan from the necessary creditor groups, it expects to execute the plan and emerge from the court-supervised process on an accelerated basis.
