Potential buyers circling Chuck E. Cheese pizza and play chain
New York grocer John Catsimatidis is considering a potential takeover bid
Chuck E. Cheese, the troubled restaurant chain and children’s party venue, is fielding interest from creditors and other potential suitors, according to people familiar with the matter, as some bricks-and-mortar establishments struggle to survive the coronavirus pandemic.
The chain, owned by private-equity firm Apollo Global Management Inc., has drawn interest from potential buyers including New York grocery magnate John Catsimatidis, some of the people said.
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New York grocer John Catsimatidis, a creditor of the Apollo-owned company, is considering a potential takeover bid of Chuck E. Cheese
Chuck E. Cheese’s parent company, CEC Entertainment Inc., is also in talks with a group of bondholders who have offered to invest more than $100 million in the company and keep it out of bankruptcy, one of the people said.
Mr. Catsimatidis, who has scooped up some CEC bonds, is exploring a possible offer for the family-entertainment company, another person familiar with the matter said.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| APO | APOLLO GLOBAL MANAGEMENT | 172.34 | -2.69 | -1.54% |
A CEC spokesperson said the company continues to explore strategic alternatives “as we seek to best position our business for long-term success and to mitigate the impact of Covid-19 on our operations.” The company said in April that it hired law firm Weil, Gotshal & Manges LLP and financial adviser PJT Partners LP.
Other potential buyers are also considering the chain, according to people familiar with the matter.
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As with other bricks-and-mortar establishments, CEC’s revenue dried up as government stay-at-home orders meant to stop the spread of the novel coronavirus forced the temporary closure of its locations.
CEC is now reopening venues and planned to have 100 of its 741 Chuck E. Cheese and Peter Piper Pizza restaurants open by mid-June, according to a letter to employees sent last week by Chief Executive David McKillips and seen by The Wall Street Journal.
While the doors were closed, Chuck E. Cheese was burning too much cash to continue operating without raising additional capital, according to Moody’s Investors Service. Still, the company had enough of a cash cushion to keep its doors closed until the fall, Moody’s said.
CEC has close to $1 billion in debt stemming from Apollo’s leveraged buyout in 2014, but faces no debt maturities until 2022. CEC’s top-ranking loans traded at about 59 cents on the dollar of face value on Friday, according to IHS Markit.
Mr. Catsimatidis sees an opportunity to own a brand-name restaurant chain that he believes will survive the pandemic, another person familiar with the matter said.
Mr. Catsimatidis, who owns supermarkets in New York City, including the Gristedes chain and a controlling interest in D’Agostino, is estimated to be worth $3.3 billion, according to Forbes.
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