The channel went out of bankruptcy less than a year ago.
California Pizza Kitchen decides to pursue a sale or IPO, according to Bloomberg.
The pizza chain is considering options as it hopes to refinance $ 177 million in debt remaining on its balance sheet following its release from bankruptcy in November 2020. The brand hired Guggenheim Partners to advise on the refinancing process, which is the same company that has helped the company through bankruptcy.
A source told Bloomberg that California Pizza Kitchen’s goal is to reduce debt before a sale to a “strategic party” or an IPO, a move driven by increased sales and the return to full capacity in California. The Golden State removed restrictions and a statewide mask warrant on June 15 after being one of the most restrictive states in the country. The timing of the refinancing has not been decided, but the outlet said it could start in the coming weeks. California Pizza Kitchen was acquired by Golden Gate Capital in 2011 for $ 470 million.
The concept was founded in Beverly Hills in 1985 by former federal prosecutors Rick Rosenfield and Larry Flax. California Pizza Kitchen now has nearly 200 restaurants around the world in 12 international cities, eight US countries and territories.
The channel filed for bankruptcy in July 2020 after facing overwhelming pressure from COVID. At the start of the pandemic, restaurant sales represented 78% of the business. So when dining halls closed nationwide, weekly net sales fell about 77% year-on-year to $ 2.5 million in the last week of March. In addition, nearly 50 stores had to close because they were not designed for locals.
However, COVID only exacerbated the problems that were already happening. In court documents, California Pizza Kitchen blamed its bankruptcy on the rapid increase in casual traffic in shopping malls and the growth of third-party delivery services. Prior to the pandemic, the company faced cash flow issues for several years and hired a management team to spark a recovery effort. In the fall of 2019, the brand began exploring M&A and even started a marketing process to sell itself, but COVID halted those efforts.
As part of its bankruptcy restructuring, California Pizza Kitchen entered into a debt-to-equity transaction and eliminated more than $ 220 million in existing funded debt. Almost all of California Pizza Kitchen’s equity is now held by CPK’s lenders.
Bloomberg reported that California Pizza Kitchen’s average weekly sales are around $ 10 million, up from $ 8 million and $ 9 million in April and May, respectively. Annualized profits are expected to exceed $ 60 million in June, up from $ 50 million before the pandemic.
The field of IPOs deepens over the weeks. Krispy Kreme joined the stock market on July 1 after going public from 2000 to 2016. Other quick service chains that have filed for IPO are Sweetgreen, Dutch Bros Coffee and Portillo’s. Private equity firm L Catterton, owner of Bartaco and Barcelona Wine Bar, and PF Chang’s are also reportedly looking to file an IPO. On the quick casual side, Torchy’s Tacos and Panera have also been linked with potential IPOs.
In February, Fertitta Entertainment, which includes Golden Nugget Casinos and Landry’s, agreed to join the special acquisition company Fast Acquisition Corp. and go public in a deal that will value the company at $ 8.6 billion.