Granite City Food & Brewery engages advisor, forbearance runs through fall - Debtwire

Granite City Food & Brewery engages advisor, forbearance runs through fall

21 June 2017 - 12:00 am

Granite City Food & Brewery has retained Lincoln International to advise on financial and strategic alternatives while the company operates under a recently inked forbearance agreement with its secured lenders, said two sources close to the situation.
The publicly traded restaurant company entered into a forbearance agreement with secured lender Citizens Bank on 28 April that extends until 2 October. Prior to that, Granite City failed to make a USD 5m principal payment on the USD 40m credit facility due 2019 and its entire credit facility was immediately classified as current, according to public filings.
The forbearance agreement requires Granite City to raise USD 7m in new capital, meet certain financial covenants and deliver a short-term budget to Citizens Bank.
Granite City’s cash was USD 4.8m on 28 March.
Granite City owns 35 Granite City restaurants in 14 states and five Cadillac Ranch restaurants in five states. Its revenues overall have been flat, but like other restaurant chains such as two concepts owned by the bankrupt Ignite Restaurant Group, margins have been under pressure. Its restaurant revenue was flat in fiscal 2016 ended 27 December 2016, at USD 150.3m as opposed to USD 150.64m in fiscal 2015, while it swung to an USD 890,000 loss in fiscal 2016 as opposed to an operating profit of USD 4.045m year-over-year.
This earnings narrative has carried through into 2017. Revenue fell slightly to USD 37.5m for 1Q17 ended 28 March, from USD 38.75 in the prior-year period. Meanwhile, operating income swung to a USD 503,000 loss for 1Q17 as opposed to operating income of USD 443,847 year-over-year.
In better days, Granite City announced the engagement of Houlihan Lokey in 2Q15 at the same time it reported adjusted EBITDA rising USD 10m for its 2014 from USD 8m, year-over-year. Since then, bar concept owners have seen a string of bankruptcies including the owners of Fox & Hound and recently Ignite, which owns Brick House Tavern + Tap.
Owners of Fox & Hound, Kelly Investment Group, made a USD 50m stalking horse bid for Ignite, though another restaurant concept owner Landry’s Inc., had indicated it was interested in bidding more for the assets.
Granite City and Lincoln did not return calls seeking comment. Citizens declined comment.