Bankruptcy court approves Real Mex sale

Bankruptcy court approves Real Mex sale

Real Mex Restaurants Inc. has a new owner and is expected to emerge from bankruptcy soon.

A Delaware bankruptcy court judge on Friday approved the sale of the parent company to the El Torito, Acapulco and Chevys Fresh Mex chains to a group of noteholders that includes Tennenbaum Capital Partners, Z Capital Partners and J.P. Morgan Investment Management, under the entity RM Opco LLC.

The bid was worth about $129 million, including $49 million in cash and an $80 million credit bid, along with assumption of certain liabilities, according to court documents. Under terms of the deal, RM Opco was expected to hold an 85-percent stake in Real Mex once the deal is closed.

Majority owner Sun Capital Partners initially acquired a controlling interest in Real Mex in 2006 in a $359 million deal. Later, Sun Capital relinquished control for several years after a debt-for-equity swap, only to take control again in 2010 [3].

Real Mex filed for Chapter 11 restructuring in October, which it attributed to the company’s high debt load, certain above-market rents and a weak economy, particularly in California, where most of the company’s restaurants are located.

The RM Opco bid was approved by Real Mex’s board earlier last week [4], and the company said at the time that the sale would likely close within 30 days of court approval, allowing the company to exit Chapter 11 with a substantially improved balance sheet, a more profitable store base and a lower cost structure.

Real Mex operates about 141 restaurants under the El Torito, Acapulco and Chevys brands, as well as single-units Sinigual and Las Brisas, and the small regional concepts Who-Song & Larry’s, Casa Gallardo and El Paso Cantina. The Chevys chain also includes about 20 franchised locations.

The sale also included Real Mex Foods, a production facility and foodservice distributor.

Contact Lisa Jennings at [email protected] [5].
Follow her on Twitter: @livetodineout [6]