The two largest franchisees of restaurant chain Arby’s have announced plans that may bring the two companies together.
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RTM Restaurant Group, the nation’s largest privately-held restaurant company and the largest franchisee of Arby’s Roast Beef Restaurants, has submitted a proposal to join with Sybra’s management team to acquire all of the capital stock of Sybra Inc, a subsidiary of ICH Corporation.
Sybra, the second largest franchisee of Arby’s, filed for Chapter 11 protection in February. Sybra currently operates 239 Arby’s Restaurants located primarily in Michigan, Texas, Pennsylvania, New Jersey, Connecticut and Florida. As part of Sybra’s restructuring plan, an affiliate of RTM and Sybra’s management have agreed to form a joint venture, which has offered to contribute to Sybra US$5m for all of its outstanding stock.
The RTM proposal includes the participation of Sybra’s senior management and the key operators of each of its regions. RTM has discussed the proposal with the senior management of Arby’s, Inc., the franchisor, which has indicated its current support for the plan. Sybra’s most significant suppliers, including Coca-Cola, MBM Corporation and Willow Run Foods, also support the plan.
The recapitalisation proposal is not subject to due diligence or financing contingencies, but is conditioned upon a restructuring and/or refinancing of Sybra’s outstanding debt to modify Sybra’s annual debt service. Sybra’s independent directors are currently reviewing the RTM recapitalisation proposal.
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By GlobalDataRuss Umphenour, president and CEO of RTM, emphasised that the recapitalisation proposal will ensure a smooth transition for Sybra’s re-organisation: “Our goal is to create a plan that will re-energise Sybra. We are pleased that Sybra’s entire senior management team will participate with us and anchor our plan for a smooth transition out of Chapter 11. RTM and Sybra’s management teams are focused on maintaining momentum while addressing issues with Sybra’s creditors.”
Coca-Cola North America also supports the plan, according to Eric McCarthey, Senior VP of Coca-Cola Fountain/North America: “We are enthusiastic about RTM’s proposal. Bringing together these two leaders in the quick service industry will strengthen both companies’ business plans. As Sybra’s largest unsecured creditor, we strongly support this initiative.”
RTM’s plan also received support from MBM Corporation, the largest distributor for the Arby’s system and Sybra’s largest supplier. Jerry Wordsworth, chairman and president of MBM said: “RTM is the natural choice to team with Sybra in leading the company out of Chapter 11. We have known RTM’s senior management team for several years and have been impressed with their system leadership. As Sybra’s largest supplier, we are confident that RTM has prepared a solid plan that ensures Sybra’s viability and reinforces the stability of the Arby’s system.”
