Buffets emerges from bankruptcy with $117.5 million of exit financing

By Caroline Salls

Pittsburgh, April 28 - Buffets, Inc. emerged from Chapter 11 bankruptcy when its plan of reorganization took effect on Tuesday, according to a company news release.

As previously reported, the plan was confirmed on April 17 by the U.S. Bankruptcy Court for the District of Delaware.

The company said it has received commitments for $117.5 million of new first-lien exit financing from various lenders, which, together with cash on hand, will enable it to refinance its existing debtor-in-possession credit facility, make plan payments and provide for working capital and other general purposes.

According to court documents, the exit facility will mature in three years.

Interest on Base rate loans will be Base rate plus 1,400 basis points, and interest on Eurodollar loans will be Eurodollar plus 1,500 bps.

Credit Suisse, Cayman Islands Branch is the administrative agent.

In addition, Buffets' $139.8 million in pre-bankruptcy second-lien rollover financing will remain in place.

"This is a great day for Buffets, and an achievement for which all of our team members should be very proud," chief executive officer Mike Andrews said in the release.

"Due to their hard work and dedication over the last fifteen months, we are emerging with a stronger balance sheet, significantly less debt, and greater resources to improve operations and make investments in our business."

In accordance with its plan of reorganization, Buffets said its newly issued equity is privately held by former creditors and does not trade on any established exchange.

Plan creditor treatment

Creditor treatment under the plan includes:

• Holders of administrative claims, priority tax claims and other priority claims will recover 100% in cash;

• Holders of other secured claims will recover 100% either through reinstatement of the claim, payment in cash or the return of the collateral securing the claim;

• Holders of the company's pre-bankruptcy senior secured loans will receive 93% of the newly issued common stock in the reorganized company and a share of any excess litigation trust proceeds;

• Holders of senior notes claims will receive 5.74% of the newly issued common stock, plus 81.93% of new warrants, 81.93% of the first $5 million of litigation trust proceeds and 81.93% of any excess litigation trust proceeds;

• Holders of general unsecured claims will receive 1.26% of the newly issued common stock, 18.07% of the new warrants, 18.07% of the first $5 million of litigation trust proceeds and 18.07% of any remaining litigation trust proceeds;

• Holders of general unsecured claims of $25,000 or less can participate in a convenience class in which they will receive cash equal to 8% of their allowed claims; and

• The company's current common stock and warrants will be extinguished, and holders will receive no distribution.

According to the release, reorganized Buffets will have a new board of directors.

Buffets Holdings, a steak-buffet restaurant company based in Eagan, Minn., operates restaurants under the names Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain. The company filed for bankruptcy on Jan. 22, 2008, and its Chapter 11 case number is 08-10141.

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