Mrs. Fields fails to launch exchange offer by June 30; noteholder committee may terminate obligations

By Caroline Salls

Pittsburgh, July 7 - A group of noteholders who agreed to support Mrs. Fields Famous Brands, LLC's proposed restructuring is reserving its right to terminate its obligations under the restructuring term sheet because the company did not meet the June 30 deadline for launching its exchange offer, according to an 8-K filed with the Securities and Exchange Commission.

Mrs. Fields entered into a binding restructuring term sheet on June 2 with some unaffiliated investors holding its 9% and 11½% senior secured notes due 2011, under which the company agreed to offer to exchange the notes for cash, new debt and new equity.

On June 3, some members of a committee of noteholders, including the investors who are parties to the restructuring term sheet, agreed to support the restructuring, provided that the committee members and the company enter into definitive documentation regarding the exchange offer that would allow it to begin by June 30.

However, Mrs. Fields said Monday that the exchange offer was not launched on June 30 but is expected to begin within the next few weeks instead.

Although the company said it is working with the committee to complete the necessary documentation, the committee members have reserved their right to terminate their obligations because Mrs. Fields did not meet the June 30 deadline.

As previously reported, if Mrs. Fields does not receive tenders into the exchange offer from holders of 98% or more of the principal amount of the senior notes, but does receive tenders from holders of two-thirds of the principal amount of the notes and one-half of the noteholders, Mrs. Fields will file a voluntary petition for Chapter 11 bankruptcy to complete the restructuring.

Mrs. Fields, based in Salt Lake City, has 2,100 franchised and licensed concept locations worldwide. Its subsidiaries include franchisors of the Mrs. Fields Cookies and TCBY franchise systems.

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