Cosi (COSI) Seeks to Sell Assets in 363 Sale
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Così, Inc. (OTC: COSIQ) said it is aggressively seeking qualified bidders who may have an interest in purchasing substantially all of its assets in a sale process under Section 363 of the Bankruptcy Code. The Company also announced that the bidding procedures and sale schedule, which are pending approval of the Bankruptcy Court, will be available on or about October 20, 2016, and that all bids must be received by November 14, 2016.
As previously disclosed, on September 28, 2016, the Company and its subsidiaries filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of Massachusetts, (Eastern Division) Case No. 16-13704 (MSH). Prior to the Chapter 11 filing, the Company entered into a non-binding term sheet with its lenders, AB Opportunity Fund LLC, AB Value Partners, L.P., and Milfam II L.P., pursuant to which these lenders or their designees agreed to lend the Company money in the bankruptcy as the Company’s debtors-in-possession (“DIP”) lenders. Also, the DIP lenders have proposed to purchase substantially all of the Company’s assets and, subject to Bankruptcy Court approval, would serve as the “stalking horse bidder” in the 363 sale process. Qualified bidders must submit a higher or better bid than the offer from the stalking horse bidder.
Interested parties must sign a confidentiality and non-disclosure agreement to gain access to confidential detailed due diligence materials, and must demonstrate financial ability to be considered qualified bidders. Parties interested in the 363 sale process may contact Randy Kominsky, Cosi’s Chief Restructuring Officer, at firstname.lastname@example.org.
For its 2015 fiscal year, the Company had revenue of approximately $90 million. Unfortunately, during 2016, the Company experienced sales decreases that led to severe cash flow problems. The deteriorating sales were at least partially due to macro-economic issues affecting the restaurant industry as a whole, and the fast-casual sector in particular, resulting in decreasing sales trends for the Company. The Company explored various alternatives and determined to file Chapter 11 on September 28, 2016 in the United States Bankruptcy Court. Immediately prior to the Bankruptcy filing, the Company closed 29 underperforming Company-operated locations.
As of October 1, 2016, the Company operated or franchised a total of 76 restaurants, of which 45 are Company operated and 31 are franchised locations. There is diversity in the Company-owned locations with restaurants in high density, urban and suburban areas, universities and transportation centers. The Company-owned locations are in leased facilities, primarily located in the cities of Boston, Chicago, New York City (Manhattan) and Philadelphia, as well as certain locations in Connecticut, Maryland, New Jersey, Virginia and Wisconsin. The Company’s franchise locations include the District of Columbia, New Jersey and several other states, and internationally in Costa Rica and the United Arab Emirates. The Company is headquartered in Boston in leased office space and does not own any real estate. The Company currently employs approximately 1,200 full and part time restaurant and field employees and 17 employees in its Support Center.
The Company’s common stock was formerly listed on The Nasdaq Stock Exchange under the ticker symbol COSI, and, as previously disclosed, was delisted as of the opening of business on October 10, 2016, for failure to satisfy NASDAQ’s continued listing requirements.
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