Quiznos completes restructuring; Avenue Capital new equity owner

By Caroline Salls

Pittsburgh, Jan. 24 - Quiznos has completed its out-of-court financial restructuring under an agreement that positions the company for future growth, according to a news release.

The agreement eliminates one-third - or roughly $300 million - of the company's outstanding debt and provides a significant infusion of $150 million in new equity from Avenue Capital Group.

"Improving our balance sheet and putting our capital structure issues behind us are major steps forward to strengthening the Quiznos brand and our customer experience," Quiznos chief executive officer Greg MacDonald said in the release.

Following the successful closing of an exchange offer launched by Quiznos on Dec. 23, Avenue Capital Group has become the company's majority owner through its $150 million equity infusion and the conversion of its debt to equity, according to the release.

Quiznos said 100% of the total principal amount of first-lien and second-lien loans was tendered in the exchange offer.

The holders of about $650 million in first-lien loans were repaid $75 million in cash, and the maturity of the balance of their loans was extended until the five-year anniversary of the closing.

The company said some lenders also exchanged roughly $150 million of their existing first-lien loans for new second-lien loans, and holders of $225 million of second-lien loans exchanged their loans for a share of 40% of the new equity of the recapitalized Quiznos.

In addition, the company said it received significant concessions from other creditors and stakeholders. Former equity owner Consumer Capital Partners facilitated the restructuring process and provided concessions to allow the restructuring to be completed out of court.

Quiznos' financial adviser for the restructuring was Moelis & Co., and its legal adviser was Paul, Weiss, Rifkind, Wharton & Garrison LLP. Vinson & Elkins LLP acted as the company's financing counsel.

Quiznos is a Denver-based quick-service restaurant chain.

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