Sbarro gets one-month reprieve
Melville-based quick-service food chain Sbarro Inc. has won another month to figure out how to restructure its heavy debt load.
Sbarro negotiated a second forbearance period with its lenders and now has until March 2 before first-lien lenders, who have priority over other creditors, can take action against the company for defaulting on its loan agreement, according to documents the company filed with the Securities and Exchange commission. The company said that it owes its first-lien lenders about $173.8 million, including unpaid interest, documents stated. Sbarro's total debt including unpaid interest is about $365 million.
"We are continuing to work constructively with our lenders to restructure our debt in a way that positions Sbarro to succeed and grow over the long term," said a Sbarro spokesman. "The forbearance agreement gives additional time to continue negotiations."
Companies negotiating several forbearance periods with their lenders is not uncommon, said Jeffrey A. Wurst, chairman of the financial services, banking and bankruptcy department at the Ruskin Moscou Faltischek law firm in Uniondale. Sbarro's first-lien lenders have the company on a tight leash, he noted, referring to various requirements outlined in the forbearance deal.