NPC International receives court approval of disclosure statement

By Sarah Lizee

Olympia, Wash., Nov. 2 – NPC International Inc. received approval of the disclosure statement for its Chapter 11 plan on Friday, according to an order filed in the U.S. Bankruptcy Court for the Southern District of Texas.

A plan confirmation hearing is scheduled for Dec. 21.

As previously reported, NPC entered into a restructuring support agreement with lenders holding 100% of its first-lien priority debt and 70% of its first-lien debt that allows it to substantially reduce its long-term debt and strengthen its capital structure.

Under the plan terms proposed in the support agreement, administrative and priority claims will be paid in full in cash.

Priority term loan facility claims will be paid in full in cash, including cash from asset sale proceeds.

Holders of first-lien secured claims will receive new first-lien takeback term loans if a stand-alone event occurs; 100% of the equity in the reorganized company, subject to dilution by a rights offering, backstop premium and management incentive plan; participation in the rights offering; and cash equal to any net sale proceeds not previously distributed.

Holders of general unsecured claims will receive any remaining sale proceeds after payment of senior claims and full funding of a wind-down reserve if a sale is completed or a treatment to be agreed upon if a reorganization is completed.

Existing equity interests will be canceled, and holders will receive no distribution.

According to the disclosure statement, the plan calls for a new-money rights offering under which eligible holders of first-lien secured claims will receive subscription rights to purchase shares in the reorganized parent company.

The rights offering shares will come in a total investment amount of no more than $150 million.

In addition, the plan calls for a sale process for and potential auction of NPC’s Pizza Hut and Wendy’s businesses and, solely to the extent a Wendy’s stand-alone event occurs, entry into a new first-lien term loan facility.

NPC said the reorganization transaction is expected to leave one or both of its businesses intact and to significantly deleverage its balance sheet.

If a sale transaction is completed, the company’s estates will be wound down and plan distributions will be funded by sale proceeds.

Leawood, Kan.-based NPC is a restaurant franchisee. The company filed bankruptcy on July 1 under Chapter 11 case number 20-33353.

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