Bertucci's Holdings, Inc.

4/16/18

Bertucci's, the well-known Massachusetts-based restaurant chain with 59 casual family dining restaurants has filed for bankruptcy in order to effectuate sale to Right Lane Dough Acquisition, LLC. The company is owned by an affiliate of Levine Leichtman Capital Partners. 

As we discussed in a recent Members'-only write-up, the casual dining space has been under siege for some time. The company notes,

"With the rise in popularity of quick-casual restaurants and oversaturation of the restaurant industry as a whole, Bertucci’s – and the casual family dining sector in general – has been affected by a prolonged negative operating trend in an ever increasing competitive price environment. Consumers have more options than ever for spending discretionary income, and their preferences continue to shift towards cheaper, faster alternatives. Since 2011, Bertucci’s has experienced a year-over-year decline in sales and revenue."

To combat these trends, the restaurant implemented what seemingly every company selling a product is trying today: experiential something-or-other. It brought back its original executive chef and deployed quarterly food and wine pairings, specialty menus, express lunches and wine specials to draw and cultivate customers. Taking a page out of Domino's book, it also invested in and launched a mobile app. These measures -- along with attempts to streamline operational costs and re-negotiate leases -- were meant to help stop the bleeding. While millions of dollars of costs were taken out and 29 unprofitable leases identified (all of which the company intends to reject immediately), revenue could not support the company's debt and working capital needs. The company defaulted on its credit facility late last year. 

The company has determined that a sale of the remaining business is the best option for maximizing value to its stakeholders. What's that value, you ask? $1.7 million in cash, a credit bid against the DIP credit facility of no less than $4 million (which is the full principal amount of the DIP), and $14 million in new second lien notes. 

• Jurisdiction: D. of Delaware 
• Capital Structure: $37.9mm secured 1st lien term loan (CIT Bank), $29.6mm secured 2nd lien term loan (DV, an affiliate of Levine Leichtman Capital Partners), $42.9mm secured holdco first lien term loan (DV)  
• Company Professionals:
  • Legal: Landis Rath & Cobb LLP (Adam Landis, Kerri Mumford, Kimberly Brown, Jennifer Cree) & (special counsel) Schulte Roth & Zabel LLP (Adam Harris) 
  • Investment Banker: Imperial Capital LLC
  • Real Estate Advisor: Hilco Real Estate LLC
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Stalking Horse Bidder: Right Lane Dough Acquisition, LLC
    • Legal: McDonald Hopkins LLC (David Agay)
  • 1st Lien Agent: CIT Bank
    • Legal: Holland & Knight LLP (Brent McIlwain) & (local) Young Conaway Stargatt & Taylor LLP (Robert Brady)