Mrs. Fields Famous Brands LLC plans to cede control to creditors including Carlyle Group LP and Z Capital Partners LLC as the cookie chain refinances debt to return to profitability.
The company, which also owns frozen-yogurt maker TCBY, started the refinancing process Oct. 21 and expects it to conclude Dec. 5, according to a statement today. Mrs. Fields hired Houlihan Lokey to advise on a proposed exchange of debt for equity, said four people with knowledge of the plan.
Mrs. Fields, based in Salt Lake City, may file for a prepackaged bankruptcy if the swap isn’t approved by next month, said the people, who declined to be named as terms are private. Private-equity firms Carlyle and Z Capital hold the majority of the treat vendor’s about $65 million in senior secured notes, they said. The lenders support the refinancing and will become the largest shareholders, Mrs. Fields said.
Mrs. Fields, which emerged from bankruptcy three years ago, franchises more than 1,200 stores under its brand and the TCBY frozen-yogurt banner. Some U.S. restaurant operators are struggling with surging commodity costs and flagging consumer confidence, leading Friendly Ice Cream Corp. and RM Restaurant Holding Corp. to seek bankruptcy protection this year.
Representatives for Carlyle and Z Capital declined to comment. Houlihan Lokey declined to comment.
Debbi Fields opened her first cookie store in Palo Alto, California, in 1977 and began franchising in 1990, according to Mrs. Fields’s website. Timothy Casey, a former executive at coffee-chain Starbucks Corp., became chief executive officer of the cookie business in May 2010.
Capricorn Holdings, a Greenwich, Connecticut-based investment firm, bought Mrs. Fields in 1996 and merged the company with TCBY after acquiring the frozen-yogurt maker in 2000, according to Capricorn’s website. Mrs. Fields sought bankruptcy protection in 2008 and emerged with bondholders holding a controlling equity stake and Capricorn retaining a minority position in the reorganized company.
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