After less than two months, Cicis Pizza has re-emerged from bankruptcy, having a new plan that strengthens the corporate team, company stability and financial structure.”
Cicis Pizza operates just under 300 stores; it is now owned by D&G Investors, a new company that is jointly owned by Gala Capital Partners and SSCP Management. The business was part of an expedited and pre-packaged bankruptcy process. The bankruptcy came after D&G got $81.6 million in debt from Cicis former lenders.
The firm put 100 percent of its secured debt into equity in Cicis Pizza and provided $9 million in debt-possession financing to help the company out of bankruptcy. The sale includes JMC Restaurant Distribution, Cicis Enterprises, and all of its subsidiaries and assets.
“We are looking forward to doing partnership with D&G Investors, going forward and ensuring the brand is ready for an open bright future,” said Jeff Hetsel, president and CEO of Cicis Pizza, in his statement. “For more than 35 years, Cicis Pizza has held a special position in the minds, and hearts of many people and their focus has always been to ensure the clients keep their bond with the brand.”
A Huge Blow in COVID-19
Cicis Pizza took a huge blow as the pandemic hit despite better marketing strategies and optimized cost structures. Even before the COVID-19 pandemic, the chain suffered a fall in the growth of the fast third-party delivery market.
Cicis Pizza was in the midst of a turnaround strategy when COVID-19 hit the world in March 2020. The instability caused Cicis to go bankrupt because of its credit agreement. In 2019, the brand got $177.3 million in revenue and $14.2 million in adjusted EBITDA. However, in 2020, payment went down to $76.3 million, and adjusted EBITDA fell to almost $2.7 million.
As the chain fell with the lenders, D&G stepped in and took over all of the debt. Cicis then contracted D&G for a transaction. After a discussion over the costs, both sides reached an agreement that saved the company from a swift bankruptcy process.
Achievements of D&G
The formation of D&G was led by Anand Gala, founder and manager of Gala Capital, and Puja Dharod, Chris, and Sunil, peers of SSCP Management. Cicis said D&G is introducing operational knowledge and investment plans to maintain long and near-term business objectives.
D&G’s achievement marks that Cicis Pizza has exchanged hands in just less than 20 years. Cicis was bought in a management auction by Levine Leichtman Capital Partners in 2003. Then, it sold the pizza chain to ONCAP Management Partners in 2007. Under ONCAP, Cicis Pizza grew roughly to 650 stores in 33 states by 2009. Seven years later, Cicis was bought by Agriculture Partners and Arlon Food. Since then, the number of stores has gone down to 430 stores.