Sydran Services, LLC
BACKGROUND
Sydran Services, LLC (Sydran) was one of the largest Burger King franchisees in the U.S., operating 227 stores in 8 states; the Company also owned and operated Chili’s restaurants.
- Sydran generated approximately $207 million in revenue and held debt of approximately $155 million.
- In 2000, CDG was engaged to provide financial advisory services in connection with a potential restructuring.
- In November 2001, Sydran negotiated a restructuring agreement with its major lenders which implemented a global restructuring.
- In September of 2004, the Company filed for Chapter 11 protection in the U.S. Bankruptcy Court in the Northern District of California - Oakland Division.
- As part of a roll-up of its existing operations and to provide capital to purchase more restaurants, in June of 2000 Sydran entered into a new $245 million term loan and revolving credit facility with Chase Manhattan Bank and a syndicate of lenders.
- By the end of 2000, significant declines in sales at Sydran’s Burger King restaurants caused a liquidity crisis and defaults under the Company’s loan and lease agreements.
- Despite the time provided by the restructuring agreement, the Company’s financial condition continued to deteriorate due to a decline in comparable store sales.
- Due to its declining operating performance, Sydran was unable to comply with the capital improvement requirements under its franchise agreements with Burger King Corporation (BKC). BKC believed the Company needed to expend up to $44.5 million over the next four to five years on capital improvements.
- CDG led the Company through the development and implementation of a weekly cash management system.
- CDG assisted the Company in pursuing various restructuring alternatives and led discussions with the lenders regarding these alteratives.
- CDG assisted the Company in negotating a restructuring agreement with its lenders that provided Sydran with nearly 2 years to try to improve its operating performance.
- As part of the restructuring agreement, CDG assisted the Company in the sale of its Chili’s operations, the proceeds of whichreduced Sydran’s debt by approximately $55 million.
- CDG assisted Sydran in negotiating a $6 million loanfrom BKC to provide funds for capital expenditures during the term of the restructuring agreement.
- CDG assisted the Company in the proposed sales of its Burger King restaurants to Cerberus through the Plan of Reorganization.