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Financing

NPC International’s asking price: At least $725M

The giant Pizza Hut and Wendy’s franchisee is looking for buyers either in parts or as a whole while in bankruptcy, but it could still opt to reorganize.
NPC Internation sale

NPC International is asking for at least $725 million in the sale of its Wendy’s and Pizza Hut operations, according to plans filed with the bankruptcy court earlier this week.

The giant franchisee, which declared bankruptcy in July, said in a plan filed with the court that it would ask for at least $400 million for its Wendy’s operations and at least $325 million for its Pizza Hut business.

But NPC’s bankruptcy plan also gives the company some flexibility. It could sell the entire company off as a single entity if a buyer is interested and doing so provides a better return. If it cannot find buyers, NPC could also restructure its debt through the bankruptcy process.

The reorganization process could mean any number of options for NPC, one of the country’s largest operators of any kind and the biggest franchisee for both Wendy’s and Pizza Hut.

NPC declared bankruptcy with $900 million in debt after several months in which it worked on a potential reorganization. Much of that debt was taken out in 2018 when NPC was sold to a pair of investment firms, Delaware Holdings and Eldridge Investment Group.

The franchisee’s Wendy’s units have been performing more strongly, given that brand’s stronger performance in recent years. The company’s Pizza Hut units have struggled largely because NPC operates a large number of full-service units. Many of those are being closed after the operator reached a deal with the franchisor to close up to 300 Pizza Hut units. Those closures were expected to help pave the way for a potential sale of the remaining restaurants.

NPC said in its filing that it started marketing its Wendy’s business and opted to pursue a formal sale process after reviewing potential buyers. The company operates about 400 Wendy’s locations. The operator said that it is looking to sell those Wendy’s restaurants “subject to a $400 million minimum purchase price, to achieve a value maximizing result for stakeholders enterprise-wide.”

The closures of the Pizza Hut restaurants would give NPC 900 of those locations.

NPC could opt to restructure, however, if it can’t find a buyer for all or part of its restaurants. The plan would feature a “significant investment of capital” that would reduce debt and increase cashflow.

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