Perkins & Marie Callender's Inc. has filed a voluntary petition for reorganization under chapter 11 of the U.S. Bankruptcy Code in order to implement financial restructuring. Concurrently with its chapter 11 filing, the company has entered into an agreement with Wells Fargo Capital Finance to provide the company with a $21 million debtor-in-possession financing facility. The company will use its cash-on-hand and the debtor-in-possession financing to maintain business-as-usual during the restructuring process. Perkins believes its current and anticipated cash resources will be suitable to pay its expenses and maintain its business operations during the restructuring. Vendors and suppliers should see no change in normal business operations, the company said in a release.

"The agreement reached with our noteholders will allow the company to restructure its balance sheet on an expedited basis, strengthen its restaurant operations, and ensure the long-term viability of the company. Our restaurant operations will not be impacted by the restructuring and our customers will continue to receive the highest quality products and dining experience they have come to expect from our restaurants," said Jay Trungale, CEO of Perkins. "We greatly appreciate and recognize the support of our employees, customers, vendors and strategic partners whose support is vital to our success."

As part of its restructuring plan, the company announced the closing of 58 Perkins and Marie Callender's restaurants. Trungale explained that, "this initial round of store closings was arrived at following store level analyses of historical financial performance, local market conditions, and cost structure. The process to indentify underperforming locations remains ongoing and will continue throughout the chapter 11 case." The company emphasized that the closings were necessary to put the company on stronger financial footing and ensure the overall profitability of its restaurant portfolio.

Higher costs for goods such as dairy, eggs, seafood and pork, which accounted for 25.4 percent of sales, were only partly offset by more efficient pie-making, according to a quarterly report. Labor and benefit costs also rose, reported the San Francisco Chronicle.

 

Sources: Perkins & Marie Callender's Inc., San Francisco Chronicle