DENVER ― Owners of the Quiznos sandwich chain are planning to invest about $50 million of equity to help the company refinance debt and avoid a technical default later this year, according to a person with knowledge of the situation.
The Denver-based company is also working with Deutsche Bank AG to offer new debt in conjunction with the equity, said three people, who asked not to be identified because the matter is private. Quiznos is owned by CCMP Capital Advisors LLC, Quiznos founder Rick Schaden and Consumer Capital Partners, the private equity firm he started.
Quiznos faces a debt covenant test this year that it may fail if it doesn’t receive new equity, one of the people said. That could result in control of the company going to creditors, the person said. The chain has about 2,900 stores in the U.S. and 600 international locations.
“The equity injection will be an important factor in Quiznos getting the debt refinanced,” said Mo Meghji, principal at New York-based advisory firm Loughlin Meghji & Co. “Despite the challenges Quiznos has faced, if the sponsors are willing to put new money into the company the lending market will take that as a strong sign of support.”
An outside spokeswoman for Quiznos declined to comment.
The company amended debt terms last year after CCMP and Consumer Capital Partners agreed to contribute additional capital, according to a statement in April 2010.
CCMP was spun off from JPMorgan Chase & Co. in 2006. Its retail investments include outdoor-sports chain Cabela’s Inc. and movie-theater chain AMC Entertainment Inc.