The parent company of Chuck E. Cheese and Peter Piper Pizza has reached a deal that gives it $200 million in financing to get through the bankruptcy process and find a buyer.
CEC Entertainment, which declared Chapter 11 bankruptcy in June as landlords began suing the company over leases, is receiving “debtor-in-possession” financing from some of its lenders.
In a legal filing, advisors to the Irving, Texas-based company said it didn’t have the cash flow to fund operations during the bankruptcy process. What’s more, the company faces “ongoing uncertainty based on the current market conditions in the dining and entertainment industry” as a result of the COVID-19 pandemic.
“Eatertainment” chains that blend food and games have been among the hardest hit during the pandemic, as they rely heaviest on games for their profits. Game playing, like other onsite entertainment options such as movie theaters and amusement parks, has been hit hard in recent months.
CEC also entered the pandemic with about $1 billion in debt.
CEC said it has an agreement with creditors holding more than two-thirds of its debt on terms of a financial restructuring, including a sale or reorganization, a credit bid to some of its lenders or a debt-for-equity exchange.
The company said it plans to continue to look for buyers. As of Friday, 316 Chuck E. Cheese and Peter Piper Pizza locations have been opened and the company says it plans to continue opening restaurants “as it is safe to do so.”
“’This agreement and financing demonstrate our creditors’ confidence in our go-forward business plan and will enable CEC to complete this financial restructuring process in a timely manner,” CEO David McKillips said in a statement.