* Could file bankruptcy as early as next week -report
* Negotiating loan from Wells Fargo -WSJ
* Company declines comment, acknowledges impact of economy
(Adds company comment)
NEW YORK, Sept 29 Burger and ice cream chain
Friendly's is close to filing for bankruptcy and may try to
sell itself at auction, the Wall Street Journal reported on
The Wilbraham, Massachusetts-based restaurant chain may
file for bankruptcy as early as next week and is in talks with
Wells Fargo & Co (WFC.N) on a $70 million loan to keep it
afloat during the process, the Journal reported, citing sources
familiar with the matter.
A spokeswoman for Friendly's said the company has a policy
of not commenting on rumors, but added in an email to Reuters:
"Like many restaurant chains, we are feeling the impact of
the economic downturn and rising commodity prices and a
challenging marketplace. We are working with our lenders, board
and management team to explore alternatives to strengthen our
Calls to Friendly's owner, Sun Capital Partners Inc, were
not returned on Thursday.
A spokeswoman for Wells Fargo declined to comment on the
According to the report, under bankruptcy, Friendly's would
roll some of its existing debt into a new loan from Wells
Fargo. The loan would also include $25 million in new funds.
Friendly's would seek an auction to sell itself out of
bankruptcy, the report said.
Friendly's has retained law firm Kirkland & Ellis and
turnaround firm Zolfo Cooper, the Journal said. Calls to both
firms were not returned Thursday.
Friendly's would be the latest in a number of restaurant
chains, including Sbarro, Fuddruckers and Charlie Brown's
Steakhouse, to file for bankruptcy because of the economic
downturn and a drop in consumer spending.
Sbarro is currently in bankruptcy in New York, where it
will either sell itself to the highest bidder or restructure
the bulk of its $395 million debt load.
(Reporting by Nick Brown and Nick Zieminski; Editing by Gary