CraftWorks Holdings, which operates restaurants and breweries under leading names such as Logan’s Roadhouse, Old Chicago, Rock Bottom, and Gordon Biersch, signed an agreement with affiliates of Fortress Credit to substantially reduce the company’s debt, strengthen liquidity, and better position the company and its popular brands for long-term growth.
The agreement provides total consideration of at least $138 million plus the assumption of certain liabilities. The transaction is expected to result in a reduction of the company’s debt by more than $140 million, or more than 60&, and additional liquidity for future investment.
In recent weeks the company has closed 37 underperforming locations.
To implement the transaction in an efficient and expedient manner, the company and its subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code. Concurrently, the company filed a motion requesting approval of a “stalking horse” asset purchase agreement with a Fortress affiliate and to initiate a competitive bidding process under Section 363 of the Bankruptcy Code designed to achieve the highest or otherwise best value for the Company.
As part of the transaction, a Fortress affiliate has committed to provide $23 million of new money DIP financing. Subject to Court approval, the DIP financing will provide the liquidity necessary to support ongoing operations in the ordinary course during the Chapter 11 process.
“Over the past 16 months, we have made significant progress on many fronts to transform our business and position our brands for long-term growth and success. Our team has enhanced the guest dining experience through the addition of new and higher-quality menu offerings and an improved guest service platform, and we have made good strides in increasing operational efficiency across our organization,” said Hazem Ouf, CEO.
The company has filed with the Court a series of customary motions seeking to continue operating its breweries and restaurants as usual and fulfill its commitments to its employees, customers, and other stakeholders during the process. These “first day” motions include requests to continue to pay wages and provide benefits to employees as usual and to honor all gift cards and all loyalty programs in the ordinary course. The company intends to continue to pay vendors in the ordinary course for all goods delivered and services rendered after the filing.
Katten Muchin Rosenman is serving as legal counsel to the company, Configure Partners is serving as investment banker, and M-III Partners, is serving as financial advisor.
CraftWorks Holdings is an operator and franchisor of full-service dining restaurants, spanning a national footprint of more than 330 restaurants and breweries in 39 states and the District of Columbia.
