California Pizza: disclosure statement, DIP loan, bid procedures OK’d

By Sarah Lizee

Olympia, Wash., Sept. 23 – California Pizza Kitchen, Inc. received court approval of the disclosure statement for its first amended joint Chapter 11 plan of reorganization on Wednesday, according to an order filed with the U.S. Bankruptcy Court for the Southern District of Texas.

A confirmation hearing has been scheduled for Oct. 29.

Under the plan, all administrative claims, priority tax claims and other secured claims will be paid in full in cash.

Each holder of an allowed debtor-in-possession facility claim will receive its allocated share of the new first-lien term loan exit facility.

Each holder of an allowed first-lien secured claim will receive its pro rata share of and interest in, as applicable, 96.5% to 100% of the new common stock, subject to dilution by the management incentive plan, the new money dip fee and the exit facility fee, the participation in the new first-lien exit facility and the new second-lien term loan exit facility.

DIP financing

The company also received final approval on Wednesday to access an up to $107.63 million superpriority senior secured multi-draw term loan credit facility.

The facility includes $46.8 million of new-money loans and $60.76 million of rolled up prepetition priority term loans.

As previously reported, the financing will enable ongoing operation of restaurants and continued payments to vendors and employees and provide for ongoing commitments to stakeholders while in Chapter 11.

Jefferies Finance LLC is the DIP financing administrative agent.

The facility will mature five months from the bankruptcy filing date.

Interest on new-money DIP loans will accrue at Libor plus 1,000 basis points, with a 1.5% Libor floor. Roll-up loans will accrue interest at Libor plus 1,000 bps, payable in-kind.

Bid procedures

The debtors also received approval from the court on Wednesday of the bidding procedures for the sale of substantially all of its assets.

The debtors may select one or more acceptable bidders to act as stalking horse bidders.

The stalking horse bid agreement will provide for bid protections of up to 3% of the proposed purchase price.

The initial minimum overbid amount will be the amount provided for in the stalking horse bid, plus the amount of the bid protections, plus $500,000. Subsequent bids must be made in minimum increments of $500,000.

Bids are due by 1 p.m. ET on Oct. 2.

An auction, if necessary, will be held on Oct. 8.

California Pizza Kitchen is a Playa Vista, Calif.-based casual dining chain and a distributor of frozen food products. The company filed bankruptcy on July 29 under Chapter 11 case number 20-33752.

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