Marie Callender's Abruptly Closes; Files For Bankruptcy - Spokane, North Idaho News & Weather KHQ.com

Marie Callender's Abruptly Closes; Files For Bankruptcy

SPOKANE VALLEY, Wash. - The restaurant best known for serving warm pies to loyal customers stunned many Monday after three Marie Callender's restaurants across Washington shut down abruptly. It's part of a move that will shutter 65 restaurants across the country and leave more than 100 employees in Washington out of work.

On Monday, customers headed to the Marie Callender's in Spokane Valley were met with locked doors and a sign that read "We regret to announce that this Marie Callender's has closed. We apologize for the inconvenience and appreciate your patronage."

After 26 years serving comfort food and training new employees at the Marie Callender's in Spokane valley, Carol Flory found out Sunday that she no longer had a job.

"I'm devastated," she said. "Not so much for me because I do have a plan but devastated for the people I work with who are single moms. We have one girl there who was pregnant, due in a couple of months, and her boyfriend there is a cook so they're both out of a job."

Flory said the news came without warning.

"Why weren't we given a heads up?" she continued. "Because it's really sad to just have no job and do it in the middle of the day."

Flory Is one of dozens now unemployed after three of the restaurants in Washington State, including Spokane Valley, Northgate, and Federal Way abruptly closed.

On Monday, the chain's parent company, Perkins & Marie Callender's, filed for chapter 11 bankruptcy. Court records show the company could not afford to build new restaurants or upgrade existing ones.

Customers were stunned. Long-time diner Starr Wilcox explained she felt, "Just shock. They've always been good to us, they've always had excellent food. Just a shock."

Thomas Holdaas, who ate Marie Callender's pies for 20 years, said, "I'm shocked that they're closed here because I always drive from Seattle to Missoula four or five times a year and I always stop here."

In the past, other Marie Callender's locations closed but Flory said, management assured employees they were still in good hands. "We were bought out by Perkins awhile back which they told us was making us financially secure by doing that."

It was a surprising end that leaves pie lovers out of luck and employees in the lurch.

"I'm really disappointed in the way they did it," Flory said.

If you're still looking to get Marie Callender's food you're going to have drive several hours to get it. The next closest locations are in Boise, Idaho and Eugene, Oregon. Coupons or gift cards are still valid and redeemable at open restaurants.

OFFICIAL PRESS RELEASE:

• Company Initiates Voluntary Chapter 11 Filing To Implement Pre-Arranged
Financial Restructuring
• Company Enters Into A Restructuring Support Agreement With 100 Percent Of
Secured Noteholders And More Than 80 Percent Of Unsecured Noteholders
• Secures Commitment On $21 Million Senior Secured, Superpriority Debtor-In-
Possession Revolving Credit Facility With Wells Fargo Capital Finance, LLC
• Announces 58 Restaurant Closings as Part of Strategic Effort to Improve Restaurant
Operations

Perkins & Marie Callender's Inc. ("Perkins" or the "Company") announced earlier today that it has entered into a restructuring support agreement (the "Restructuring Support Agreement") with holders of 100 percent of the Company's 14% Senior Secured Notes due 2013 and more than 80 percent of the Company's 10% Senior Notes due 2013 pursuant to which the Company has agreed to
implement a financial and operational restructuring that will rationalize the Company's
store footprint and result in a restructured balance sheet that will position the Company
for long-term financial success.


As contemplated by the Restructuring Support Agreement, the Company has filed a voluntary petition for reorganization under chapter 11 of the U.S. Bankruptcy Code in order to implement the agreed-upon terms of the financial restructuring. Pursuant to the restructuring, the holders of the Company's Senior Secured Notes have agreed to certain amendments to the notes including a two year maturity extension.

The Company's unsecured creditors will convert their claims into 100 percent of the equity of the newly reorganized Company. The Restructuring Support Agreement requires the Company to file a plan of reorganization by no later than July 14, 2011 and to complete the restructuring by no later than October 21, 2011. Upon completion of the restructuring, the Company will be majority controlled by private investment funds managed by Wayzata Investment Partners LLC, a Minnesota-based private equity firm.

Concurrently with its chapter 11 filing, the Company has entered into an agreement with Wells Fargo Capital Finance to provide the Company with a $21 million debtor-inpossession financing facility. The Company will use its cash-on-hand and the debtor-inpossession financing to maintain business-as-usual during the restructuring process.

The Company believes its current and anticipated cash resources will be suitable to pay its expenses and maintain its business operations during the restructuring. Vendors and suppliers should see no change in normal business operations. "The agreement reached with our noteholders will allow the Company to restructure its balance sheet on an expedited basis, strengthen its restaurant operations, and ensure the long-term viability of the Company.

Our restaurant operations will not be impacted by the restructuring and our customers will continue to receive the highest quality products and dining experience they have come to expect from our
restaurants," said Jay Trungale, chief executive officer of Perkins. "We greatly appreciate and recognize the support of our employees, customers, vendors and strategic partners whose support is vital to our success."

As part of its restructuring plan, the Company also announced the closing of 58 Perkins and Marie Callender's restaurants. Mr. Trungale explained that, "this initial round of store closings was arrived at following store level analyses of historical financial performance, local market conditions, and cost structure.

The process to identify underperforming locations remains ongoing and will continue throughout the chapter 11 case." The Company emphasized that the closings were necessary to put the Company on stronger financial footing and ensure the overall profitability of its restaurant portfolio.

The Company operates two family-dining restaurant chains, Perkins Restaurants and Marie Callender's. The Company has stated that the continuing weak economy has hurt its business, noting that the recession and the decline of housing prices hit hardest in markets where the Company's restaurants are most concentrated: Florida, California and Nevada.

The Perkins and Marie Callender's restaurants operate as separate brands. Perkins, concentrated in midwestern and southeastern states, has 133 company-owned and 315 franchised restaurants. Marie Callender's, located in California and the southwest, operates 52 company and 37 franchised restaurants. Franchisees, vendors and other stakeholders can obtain additional information
about the reorganization by visiting www.PRKMCRestructuring.com.

This press release contains "forward-looking statements." These statements may be identified by the use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should," or "will," or the negative thereof or other variations thereon or comparable terminology.

The company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the company believes these expectations, assumptions, estimates and projections are reasonable, such forwardlooking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control.

Some of the key factors that could cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking
statements include the following:

- competitive pressures and trends in the restaurant industry;
- prevailing prices and availability of food, supplies and labor;
- relationships with franchisees and financial health of franchisees;
- general economic conditions and demographic patterns;
- development and expansion plans; and
- statements covering business strategy.

Undue reliance should not be placed on such forward-looking statements. The forwardlooking
statements included in this press release are made only as of the date hereof.

The company does not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.

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