Cosi Prepares For Sale

Cosi Inc., the fast-casual restaurant company, 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 says that the bidding procedures and sale schedule, which are pending approval of the Bankruptcy Court, will be available on or about Oct. 20 and that all bids must be received by Nov. 14.

new-cosi-logoOn Sept. 28, the company filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the District of Massachusetts. 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 LP and Milfam II LP, pursuant to which these lenders agreed to lend the company money in the bankruptcy as the company’s debtors-in-possession (DIP) lenders. In addition, 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.

For its 2015 fiscal year, the company had revenue of approximately $90 million. Immediately prior to the bankruptcy filing, the company closed 29 underperforming operated locations. As of Oct. 1, 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 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.

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