LEAWOOD, Kan.--(BUSINESS WIRE)--NPC International, Inc. (“NPC” or the “Company”) today announced that it has entered into a restructuring support agreement (“RSA”) with lenders holding approximately 100% of the Company’s first lien priority debt and 70% of its first lien debt (collectively, the “Senior Secured Lender Group”) to substantially reduce NPC’s long-term debt and strengthen the Company’s capital structure. NPC and the Senior Secured Lender Group contemplate that the terms of the RSA would become part of a comprehensive Chapter 11 plan to restructure the Company’s balance sheet and optimize its portfolio of restaurants throughout the country.
Accordingly, today NPC and certain of its affiliates and subsidiaries filed voluntary petitions to restructure under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas (the "Court"). NPC intends to use the Chapter 11 process to engage in further discussions with its brand partners, landlords and other creditors to achieve a consensual Chapter 11 plan of reorganization that will best position the Company for long-term success in the current restaurant industry environment.
“As our industry has been in the midst of dynamic changes due to shifting consumer preferences and dining behavior, we also have been facing increased labor and commodities costs and a higher level of financial leverage that presents obstacles to achieving our long-term business objectives,” said Jon Weber, CEO & President of NPC’s Pizza Hut division. “These challenges have been magnified recently by the impact and uncertainty of COVID-19, and we believe it is necessary to take proactive steps to strengthen our capital structure, so we have the financial flexibility to continue to adapt to current industry trends. We also intend to use this process to continue to evaluate and optimize our restaurant portfolio so that we are best positioned to meet the needs of consumers across the country.”
“We are very pleased with the support we are receiving from our senior lenders, which demonstrates their confidence in NPC and our potential for long-term success once we get the company in a stronger financial position,” said Carl Hauch, CEO & President of NPC’s Wendy’s division. “The Wendy’s business remains strong and resilient and is already recovering from the impact of the pandemic to produce year-over-year growth. We look forward to continuing our discussions with our brand partners, landlords and other creditor groups and are confident that we will be able to work collaboratively to agree on a long-term plan that is in the best interests of all stakeholders.”
NPC has filed several customary "First Day" motions with the Court, which are intended to ensure that the Company is able to maintain operations in the ordinary course and facilitate a smooth transition into Chapter 11. Among these is a motion to continue providing wages, salaries and benefits to all NPC employees without change or interruption, and NPC does not expect there to be any changes to employees’ day-to-day job responsibilities or work schedules. Similarly, NPC intends to pay vendors under customary terms for goods and services provided on or after the Chapter 11 filing date. The Company has sought and expects to receive Court authorization to continue to use its available cash, which it believes will provide sufficient liquidity to meet its ongoing obligations throughout the Chapter 11 process.
Restaurant Service Will Continue with COVID-19 Precautions in Place
NPC’s Pizza Hut and Wendy’s restaurants throughout the country remain open for business on regular schedules. NPC is continuing to closely follow the guidance and recommendations from the Centers for Disease Control and Prevention (CDC), as well as from local and federal governments and public agencies, regarding any service restrictions. The Company remains focused on protecting the safety of its team members and guests, while serving and supporting its local communities.
Mr. Hauch said, “During the past few months as we have navigated the challenges presented by COVID-19, Jon and I have been incredibly pleased with the resilience of our business and the commitment of our employees throughout the NPC organization. We could not be prouder of the way our teams responded to an unprecedented situation and continued to provide essential dining services to consumers throughout the country. As we go through this process, that focus on providing outstanding and safe service to guests in our Wendy’s and Pizza Hut restaurants will not change. Our restaurants remain open on normal schedules, and we are maintaining the highest standards of safety, cleanliness and hygiene.”
“We would like to thank our outstanding team members for their hard work and dedication,” said Mr. Weber. “The quality of our team is one of our company’s greatest strengths, and it is a big part of what gives us confidence about the future. We believe that by reducing our debt level and improving our capital structure, we will create a stronger future.”
Additional information about the Chapter 11 case, including access to Court filings and other documents related to the restructuring process, is available at http://dm.epiq11.com/NPC; or by calling NPC’s restructuring information line at (855) 917-3563 (Toll free U.S.) or +1 (503) 502-4403 for (Non-U.S. Parties) or sending an email to NPCInquiries@epiqglobal.com.
Weil, Gotshal & Manges LLP is acting as NPC’s legal counsel, Greenhill & Co., LLC is acting as financial advisor, and AlixPartners LLP is serving as restructuring advisor to the Company.
About NPC International
NPC International, Inc. is the largest franchisee of any restaurant concept in the U.S., based on unit count, and the fifth largest restaurant unit operator, based on unit count, in the U.S. The Company, which is headquartered in Leawood, Kansas and has a shared services center located in Pittsburg, Kansas, has a total of approximately 7,500 full time employees and approximately 28,500 part time employees, and operates in 30 states and District of Columbia.