Bloomberg News

Mrs. Fields Said to Be Near Ceding Control to Creditors

November 30, 2011

(Updates with Mrs. Fields’ statement in second paragraph.)

Nov. 18 (Bloomberg) -- Mrs. Fields Famous Brands LLC may cede control to creditors including Carlyle Group LP and Z Capital Partners LLC by swapping debt for equity to avoid bankruptcy, said four people with knowledge of the plan.

The cookie company, which also owns frozen-yogurt maker TCBY, hired Houlihan Lokey to advise on the proposed exchange, said the people, who declined to be named as terms are private. Mrs. Fields, based in Salt Lake City, may file for a prepackaged bankruptcy if the swap isn’t approved by next month, they said. Mrs. Fields confirmed an offer to refinance debt in a statement today.

Private-equity firms Carlyle and Z Capital hold the majority of the treat vendor’s about $65 million in senior secured notes, paving the way for them to take charge, the people said. Mrs. Fields, which emerged from a previous bankruptcy three years ago, franchises more than 950 stores under its brand and the TCBY frozen-yogurt banner.

Some U.S. restaurant operators are struggling with surging commodity costs and flagging consumer confidence, leading Friendly Ice Cream Corp. and RM Restaurant Holding Corp. to seek bankruptcy protection this year. Both chains cited the economic slowdown for shrinking sales.

Representatives for Carlyle and Z Capital declined to comment. Dean Trevelino, a spokesman for Mrs. Fields, didn’t immediately return a call seeking comment. Houlihan Lokey declined to comment.

Tasty Origins

Debbi Fields opened her first cookie store in Palo Alto, California, in 1977 and began franchising in 1990, according to Mrs. Fields’s website. Timothy Casey, a former executive at coffee-chain Starbucks Corp., became chief executive officer of the cookie business in May 2010.

Capricorn Holdings, a Greenwich, Connecticut-based investment firm, bought Mrs. Fields in 1996 and merged the company with TCBY after acquiring the frozen-yogurt maker in 2000, according to Capricorn’s website. Mrs. Fields sought bankruptcy protection in 2008 and emerged with bondholders holding a controlling equity stake and Capricorn retaining a minority position in the reorganized company.

--Editors: Julie Alnwick, Jennifer Sondag

To contact the reporters on this story: Jonathan Keehner in New York at jkeehner@bloomberg.net; Cristina Alesci in New York at calesci2@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; David Scheer at dscheer@bloomberg.net


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