Quiznos Corp. confirmed Monday that it has hired a restructuring team of financial and legal advisers to rework the sandwich chain’s finances.
The law firm Paul Weiss Rifkind Wharton & Garrison LLP and investment bank Moelis & Co. were reportedly hired by the Denver-based company last week.
Company officials confirmed via e-mail Monday that it brought in help to “drive an outcome that will help Quiznos grow and prosper.
“Quiznos has hired a financial advisor to assist in working constructively with its lenders to develop a proper financial structure for the company,” officials said in a statement. “We expect these activities will not adversely impact Quiznos’ customers, franchise owners, employees or business partners.”
According to a Bloomberg news report, Quiznos founder Rick Schaden and partners were planning to invest about $50 million in new equity to help refinance debt to avoid potential default this year. The chain’s ownership team includes CCMP Capital Advisors LLC, and Schaden’s private equity firm Consumer Capital Partners. The Quiznos chain totals 3,500 units.
Citing unnamed sources, Bloomberg reported that Quiznos is working with Deutsche Bank AG (DBK) to offer new debt in conjunction with the equity.
A rocky 2010
In 2010, Quiznos received an injection of capital from primary shareholders, and the company said at the time that it had amended the terms of existing secured debt with its lenders to provide the chain with resources and flexibility to further growth objectives.
In January, however, Quiznos said it would lay off about 154 employees worldwide to cut expenses and provide more financial support to franchisees. At the time, the company blamed the slow economy for the need to cut costs.
Also in 2010, Quiznos finalized a $206 million settlement with as many as 8,000 current and former franchisees involved in four class-action lawsuits.
The settlement ended multi-year litigation that involved allegations of racketeering and corruption, as well as complaints about supply and food costs, marketing and advertising funds and royalties owed by franchisees that bought but never opened stores.
Quiznos denied all claims and agreed to the settlement without admission of liability.
The sandwich chain is looking to expand, and recently reported a franchise agreement that could add 200 sandwich shops in Brazil – part of an overseas push that includes about 40 countries and territories.
The chain also announced a partnership with Hess gas-and-retail outlets in Florida to add 50 new Quiznos locations there by the end of the year, which is part of an ongoing strategy to move into more convenience store locations.