EAGAN Minn. Buffets Holdings Inc., operator of five buffet or steakhouse chains, has filed for Chapter 11 bankruptcy protection
The company, owned by private-equity firm Caxton-Iseman Capital LLC of New York, said in a statement that it plans to keep all 626 restaurants within its 39-state system open during a financial reorganization. Its brands are Old Country Buffet, HomeTown Buffet, Ryan’s, Fire Mountain and Tahoe Joe’s Famous Steakhouse. Sixteen restaurants are franchised.
Buffets has secured a $385 million debtor-in-possession financing facility from several institutions, subject to court approval. The remaining balance of Buffets’ $640 million pre-petition credit facility and the $300 million 12.5 percent senior notes, due Nov. 1, 2014, remain as outstanding obligations.
The company, which reported a loss of $5.3 million in its first quarter ended Sept. 19, blamed the shortfall on consumer belt-tightening and higher labor, food and energy costs. Adding to Buffets’ woes was a missed coupon payment this month on $293 million of debt.
“This restructuring is driven primarily by the need to reduce the amount of debt on our balance sheet,” chief executive Mike Andrews said in a statement.
The company will strive to enhance efficiency and profitability by reviewing all underperforming locations, among other things, Andrews said.
