Mrs. Fields Terms on Debt Restructuring with Senior Noteholders

Mrs. Fields warns that unless its sizable debt can be restructured, it will seek bankruptcy procedures by August. The following are the core terms that if 98% of the noteholders of its debt can agree to will prevent it from filing Chapter 11 in August.

To facilitate the consensual implementation of the Restructuring, the Restructuring Support Agreements contemplate that Mrs. Fields and the Supporting Noteholders will negotiate and enter into definitive documentation and commence the Exchange Offer and Consent Solicitation not later than June 30, 2008. In the event that Mrs. Fields does not receive tenders into the Exchange Offer from holders of 98% or more of the aggregate principal amount of Senior Notes (collectively, the “Noteholders”), but does receive tenders from the holders of two-thirds in aggregate principal amount of the Senior Notes and one-half in number of the Noteholders, the Company will file voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code and seek confirmation of a pre-packaged plan of reorganization not later than August 15, 2008 (the “Bankruptcy Cases”). The Company will include materials as part of the Exchange Offer requesting support of the Bankruptcy Cases, if necessary.

Specifically, the Restructuring Support Agreements provide for the following treatment of claims and interests through the Exchange Offer or Bankruptcy Cases, as applicable:

1. In exchange for tendering into the exchange offer, the Noteholders will receive a pro rata share of (i) $90 million in cash, subject to specified downward adjustments, (ii) new senior secured notes in an aggregate principal amount of $50 million plus the amount of any cash shortfall below $90 million, and (iii) 87.5% of the new common equity to be issued on the effective date of the Exchange Offer or Bankruptcy Cases.

2. Holders of all other claims against Mrs. Fields will receive full payment in the ordinary course of business.

3. Holders of Mrs. Fields’ existing common equity will be entitled to retain or receive 12.5% of the new common equity to be issued on the effective date and warrants to increase its ownership to up to a 30% stake in restructured Mrs. Fields pursuant to a pricing formula set forth in the Restructuring Support Agreements.

The indicated levels of equity ownership in restructured Mrs. Fields, for both the Noteholders and Mrs. Fields’ existing common equity, will be subject to dilution by a new management incentive plan and future issuances of equity.

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Read full details from Press Release: Mrs. Fields Reaches Agreement on Terms of Consensual Restructuring with Senior Noteholders, (pdf, 3 pgs)