Friendly’s, the ice cream and burger chain that has more recently been in the news for pushing the limits of cheese tolerance by slapping a burger between two grilled cheese sandwiches, is reportedly considering filing for Chapter 11 bankruptcy protection and possible sale.
According to the Wall Street Journal, Friendly’s, which could file for protection within the week, would try to sell itself at auction.
From the WSJ:
Friendly’s, which carries more than $250 million in debt, is in talks with Wells Fargo & Co. for about $70 million in so-called debtor-in-possession financing that would keep it afloat during bankruptcy proceedings, the people said. The bankruptcy financing would consist of about $25 million in new funds and other existing debt that would “roll up” into the new loan, the people said. Wells Fargo declined to comment.
Because declining sales have triggered a condition in Friendly’s Wells Fargo credit line that prevents the chain from borrowing as much as it would like, sources tell the Journal that Friendly’s only has about $3.5 million in available funds. It already owed Wells Fargo about $30 million and has another $225 million in secured bond debt owed to its private-equity owner, Sun Capital Partners.
So if you’re a fan of Friendly’s oh-so-tasty Reese’s Pieces Sundaes, you may be making them at home soon enough.
Friendly’s Restaurant Weighs Chapter 11 [Yahoo Finance]
Thanks to Harper for the tip!