Pie Face, the fast food franchise placed in voluntary administration last month, looks set to survive following a deal struck with creditors at a meeting in Sydney.
Fairfax Media reports that suppliers who are unsecured creditors will receive as little as 14 cents in the dollar owed and will wait two years for payment as part of the deal.
Creditors have agreed to a deed of arrangement with an existing director, former Liberal MP Andrew Thomson, appointed CEO and chairman, while co-founder Wayne Homschek, a former Wall Street banker, will continue as a director due to his understanding of the 11-year-old business, as well as another former director, John Nicolis.
New York-based investment firm Global Credit Master Fund has provided Pie Face with a $2 million, which was used to pay out major secured creditor Macquarie Capital, which relinquished its charges over the company, saving it from liquidation after Macquarie appointed insolvency firm Ferrier Hodgson as receiver over some assets.
TCA plans to raise a further $10 million in capital in the US. Director Bruce Wookey will join the four-man Pie Face board.
Last month administrators Jirsch Sutherland closed 18 company-owned stores in NSW and Victoria as it sought to reduce losses believed to be in excess of $150,000 a week. Around 130 jobs have also been shed.
Pie Face had more than 70 stores in Australia, the majority of them franchised. There are now 51, with two franchised stores also closing. The company also shut outlets in New York and is facing legal action from disgruntled franchisees as well as American investor and casino billionaire Steve Wynn who has filed a lawsuit seeking the return of his $US15 million investment in the expansion of Pie Face’s US subsidiary.
The Australian says a creditors’ report, released last week, claimed Pie Face may have been trading while insolvent for at least a year before voluntary administrators were appointed.
Homschek told The Australian he could comment on the details, but explained “There are three companies in the group: there’s the holdings and there’s subsidiaries. So individually he made comments on specific companies but not as a whole, so from what I understand there’s a difference.”
Pie Face is believed to owe the Australian Taxation Office millions of dollars.
While several high-profile investors have ploughed more than $50 million into Homschek’s dreams of global expansion for the fast food chain and an IPO, the state of their stakes remains uncertain.
In the wake of its near collapse, Pie Face will focus on wholesale, selling pies to Jetstar and also trialling frozen pie sales in Woolworths.
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