Quiznos, a quick-service restaurant chain, announced that it has successfully completed its previously announced financial restructuring on an out-of-court basis. The agreement eliminates one-third – or approximately $300 million – of the company’s outstanding debt, and provides a significant infusion of $150 million in new equity from Avenue Capital Group, a global investment firm, to position Quiznos for future growth.

“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,” said Greg MacDonald, Quiznos CEO. “We look forward to working alongside the Avenue Capital Group team and appreciate the support of all of our lenders during this restructuring process. Along with our dedicated franchise owners and employees, we can now focus primarily on the customer experience and our fresh, high-quality products. This is an exciting time for all of us here.”

Following the successful closing of an exchange offer launched by Quiznos on December 23, 2011, Avenue Capital Group has become the majority owner of the company through its $150 million equity infusion and the conversion of its debt to equity. Marc Lasry, CEO of Avenue Capital Group, said, “We are excited to be part of the Quiznos team and look forward to partnering with management in the weeks and months ahead.”

One hundred percent of the aggregate principal amount of the first lien and second lien loans were tendered in the exchange offer. The holders of approximately $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. Certain lenders also exchanged approximately $150 million of their existing first lien loans for new second lien loans, and holders of approximately $225 million of second lien loans exchanged their loans for a pro rata share of 40% of the new equity of the recapitalized Quiznos. In addition, the company received significant concessions from certain other creditors and stakeholders. Former equity owners Consumer Capital Partners facilitated the restructuring process and provided certain concessions to allow the restructuring to be completed out of court.

Quiznos’ financial advisor for the restructuring was Moelis & Company and its legal advisor was Paul, Weiss, Rifkind, Wharton & Garrison. Vinson & Elkins acted as the company’s financing counsel. The financial advisor for Avenue Capital and certain other lenders was Lazard and the legal advisor was Akin Gump Strauss Hauer & Feld. The financial advisor for first lien lenders was Blackstone Advisory Partners and the legal advisor was Willkie Farr & Gallagher.

Previously on abfjournal.com:

Avenue Capital to Become Majority Owner of Quiznos in Restructuring, Tuesday, December 27, 2011