Chuck E. Cheese parent wraps restructuring, emerges from bankruptcy

By Sarah Lizee

Olympia, Wash., Dec. 30 – CEC Entertainment, Inc., which operates Chuck E. Cheese and Peter Piper Pizza, has completed its restructuring and emerged from Chapter 11 bankruptcy, according to a press release issued Wednesday.

The company said it has emerged with a significantly strengthened financial position, about $705 million of debt eliminated from its balance sheet, and a new board of directors and ownership.

As previously reported, the company’s Chapter 11 plan of reorganization was confirmed on Dec. 15 by the U.S. Bankruptcy Court for the Southern District of Texas.

The plan calls for a restructuring that includes a debt-for-equity exchange. The debtors will fund distributions and satisfy applicable claims under the plan with cash on hand, an exit facility, a new second-out term loan facility, new equity interests and new warrants.

Holders of first-lien debt claims will receive their pro rata share of 100% of the new equity interests, subject to dilution and their pro rata share of the second-out term loan facility.

Holders of senior unsecured notes claims will receive their pro rata share of new warrants, subject to dilution.

Holders of general unsecured claims will receive GUC trust interests that will entitle each holder to receive its pro rata share of GUC trust assets after the GUC trust expenses have been paid in full or otherwise reserved for.

Each holder of existing Queso interests will receive no recovery.

The $200 million first-lien first-out term loan facility will be backstopped by initial consenting creditors. The amount is subject to increase as needed to repay claims under the debtor-in-possession facility and fund the liquidity requirements of the reorganized debtors.

The $175 million first-lien second-out term loan facility will mature in seven years and bear interest, at the debtors’ election, Libor plus 650 basis points, or, at any time during the first two years following the effective date, Libor plus 150 bps paid in cash and 550 bps paid in kind, with a Libor floor of 1%.

CEC Entertainment was advised by Weil, Gotshal & Manges LLP as legal counsel, PJT Partners as investment banker, FTI Consulting as financial adviser and Hilco Real Estate as real estate consultant. The ad hoc group of first-lien lenders was advised by Akin Gump Strauss Hauer & Feld LLP as legal counsel and Houlihan Lokey Capital, Inc. as financial adviser.

CEC is an Irving, Tex.-based operator of family dining and entertainment stores. The company filed bankruptcy on June 24 under Chapter 11 case number 20-33163.

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