Dec 22 (Reuters) - U.S. sandwich chain Quiznos, which is struggling with slumping sales and a recent violation of debt terms, is close to a deal to restructure its roughly $870 million of debt, the Wall Street Journal said, citing people familiar with the matter.
The deal under discussion is being driven by Quiznos’s biggest lenders, who have a plan to take ownership of the company as long as other creditors give their consent, the Journal said.
Should the deal not meet approval Quiznos plans to file for Chapter 11 bankruptcy protection, the newspaper said.
As part of the tentative deal, hedge fund Avenue Capital would convert its debt to equity and invest cash in Quiznos, giving Avenue more than a 70 percent ownership stake in the chain, the sources told the Journal.
Quiznos’s current owners, private equity firm CCMP Capital Advisors and investment firm Consumer Capital Partners are not likely to get any recovery on their investments, the newspaper said.
Representatives for Quiznos, Avenue and CCMP contacted by the Journal declined to comment. A representative for Consumer Capital had no immediate comment.
Reuters could not immediately reach any of the parties for comment.