After closing a chunk of stores earlier this year, Sbarro Inc. is preparing to file for bankruptcy protection, maybe as early as next week, according to the Wall Street Journal.
The shopping mall pizza staple is rumored to be in talks regarding a restructuring deal that would reduce the company's nearly $365 million debt.
Sources told the WSJ that the Chapter 11 filing could come as early as Monday and would take place in New York. The 55-year-old company, based out of Melville, N.Y., runs close to 1,000 restaurants in 30 countries.
If the protection is filed as expected, operations are expected to continue without interruption.
Sbarro defaulted on a credit agreement and hired Rothschild Inc. to help it explore strategic financial options in January.
From the story:
(Sbarro's) troubles stem in part from debt taken on in 2007 to back a buyout by private-equity firm MidOcean Partners. The private-equity firm's current ownership stake is likely to be wiped out in the bankruptcy ... MidOcean also holds about 95 percent of Sbarro's second-lien debt. In the plan under discussion, MidOcean and others holding that roughly $33 million in debt would forgive it for ownership stakes in Sbarro when it emerges from bankruptcy protection. Bondholders owed about $158 million would also forgive their debt for equity ... Taken together, the restructuring moves would leave MidOcean and Ares in control of the chain.
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