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Log In / Register | May 24, 2018

Fortress to Own Biggest Stake in Bankrupt Quiznos

As Quiznos filed for Chapter 11 bankruptcy today in Delaware bankruptcy court, listing debt of more than $500 million, lenders struck a restructuring deal with Wes Edens’ Fortress Investment to own the largest stake in the company.

New York Post reported this afternoon that Quiznos listed debt of more than $500 million, and would seek to slash its debt by close to $400 million “through a plan that had overwhelming support of senior lenders.”

Big lenders, including Fortress, Howard Marks’ Oaktree Capital and Michael Dell’s MSD Capital, are hammering out a debt-restructuring deal for when they take control of the company, sources said.

Sources close to the New York Post said that tentative plan calls for Quiznos to cut its debt from roughly $600 million to $225 million. That will allow the chain to return to slight cash flow positive.

Under the tentative plan, senior lenders will get 70 percent of the No. 2 sandwich chain while junior debtholders will get the rest, according to a source with direct knowledge of the situation.

With Fortress holding senior and subordinated debt, it stands to get 30 percent to 40 percent ownership in the sub sandwich chain.

Oaktree is angling for a roughly 30 percent stake as part of the debt-for-equity swap.

MSD and Caspian Capital Advisors are discussing smaller stakes in the restructured company as well, sources said. Senior lenders are also expected to get seats on the board.

Post reporter Josh Kosman said Avenue Capital, Quiznos’ controlling shareholder that gained control in 2012, will lose its ownership of the chain in bankruptcy.

The hedge fund, which also holds junior debt, would see its more than 70 percent stake shrink to less than 10 percent under the proposed deal, sources said.

One source said Quiznos would not have to pay interest on the $225 million for 18 months, although interest will accumulate.

With the average Quiznos franchisee losing money, the Post reported that new owners “are considering reducing the price of goods they sell their franchisees to help them regain their financial footing.”


Article: Fortress poised to get biggest stake in bankrupt quiznos


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About Janet Sparks

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Janet Sparks is the former publisher of the Continental Franchise Review, an industry newsletter that covered the franchise community for over 30 years. She has also been a columnist for a leading franchise magazine for the past 13 years. Today she is an independent journalist who engages in investigative reporting, tackling complex issues that impact the franchise industry.

Janet can be reached at or at 303-799-7398.