|
'Stars' eatery gets bail-out
|
 |
August 17, 1999: 5:53 p.m. ET
Planet Hollywood gets $30 million cash infusion, heads toward Chapter 11
|
NEW YORK (CNNfn) - Planet Hollywood, the glitzy theme restaurant backed by some of Tinseltown's biggest stars, received a $30 million cash infusion Tuesday to keep the company operating while it negotiates a pre-packaged plan for Chapter 11 bankruptcy with its creditors.
The cash-strapped Orlando-based restaurant group, which defaulted on $250 million in senior subordinated notes in April, said it will receive a $30 million equity infusion from an investor group organized by its co-founder, theme restaurant entrepreneur Robert Earl, and its two largest investors.
In exchange for the onetime cash payment, the investment group will assume a 70 percent equity stake in the company once it reorganizes under bankruptcy protection, while its bond holders -- should they approve the proposed plan -- would receive a less than 30 percent stake.
The current shares of Planet Hollywood (PHL) will be canceled and replaced with 200,000 warrants priced so they would be "in the money" only if unsecured creditors are paid in full.
The proposed plan must be approved by roughly two-thirds of Planet Hollywood's bondholders, who have been negotiating a settlement with the restaurant since April.
The company said it had received the unanimous agreement of a subcommittee of creditors. Company officials hope to gain Chapter 11 protection by the end of the year.
Under a so-called "pre-packaged" bankruptcy, the debtor goes to court only after winning creditors' approval for the plan, then uses the legal provisions of Chapter 11 to implement the agreement. Using this approach, the company may be under the court's supervision for only a few weeks.
"We are confident we are taking the necessary steps to revitalize our Planet Hollywood operations," Earl said in a written statement.
Although few details were released Tuesday, it is expected that any reorganization plan will include the restaurant's previously stated intention to sell off its Official All Star Café, Cool Planets and Sound Republics restaurant-chain concepts.
Earlier this month, Planet Hollywood sold its 20 percent stake in New York's Hotel Pennsylvania to Vornado Realty Trust (VNO) for $18 million in cash and $25 million in debt.
The bond holders, who were represented by Los Angeles investment banking firm Houlihan Lokey, Howard and Zukin in the negotiations, have been offered $47.5 million in cash and $60 million in new secured notes to satisfy their debt holdings. In addition, the bond holders would be awarded new common stock in the company equivalent to a 26.5 percent equity stake following the reorganization.
Included in Earl's investment group are Saudi Arabian Prince Alwaleed Bin Talal and Ong Beng Seng, managing director of Hotel Properties Ltd., a hotel and investment holding company. Bin Talal owns a roughly 15 percent stake in the company, as well as Planet Hollywood's franchising rights for Europe and the Middle East.
Earl's contribution came in the form of a trust in which the sole beneficiaries are his children.
In addition to its cash contribution, the investor group will assist in obtaining a minimum $40 million bridge facility that will be secured by nearly all the company's assets.
In the meantime, the struggling restaurant will attempt to salvage a business that was once among the nation's hottest theme restaurant chains.
Launched in 1991 by Hollywood film producer Keith Barish and Earl, Planet Hollywood quickly established a worldwide brand name by featuring movie memorabilia in its restaurants and by attracting a star-studded investment pool, including the likes of Arnold Schwarzenegger, Demi Moore, Bruce Willis and Sylvester Stallone.
But the company's star quickly faded amid complaints about the quality of its food and investor concerns about its rapid expansion. The company has lost millions in the last year, prompting its president and chief operating officer, William Baumhauer, to resign in late June.
Planet Hollywood's stock was unchanged at 3/4 as investors digested the news Tuesday afternoon. 
|
|
|
|
|
|
Planet Hollywood
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
