Bloomberg News

Tennenbaum, Z Capital Said Near Deal for Sun Capital’s Real Mex

February 07, 2012

Feb. 6 (Bloomberg) -- Creditors Tennenbaum Capital Partners LLC and Z Capital Partners LLC are poised to take control of Sun Capital Partners Inc.’s Real Mex Restaurants Inc. as part of a reorganization, said two people with knowledge of the talks.

JPMorgan Chase & Co., a creditor, also will take a stake in the company, said the people, who asked not to be named because the talks are private. Real Mex, purchased by an affiliate of Sun Capital in 2006 for $359 million, operates the El Torito, Acapulco and Chevys Fresh Mex restaurant chains. It may emerge from bankruptcy under new ownership as early as March, the people said.

Real Mex, which has almost 200 restaurants, filed for Chapter 11 protection on Oct. 4 with $272.2 million of assets and $250 million of debt. Revenue of $243.4 million in the first half of 2011 resulted in a $67.4 million operating loss and a net loss of $81.7 million for the Cypress, California-based company.

Representatives of Tennenbaum and Z Capital declined to comment. Representatives for JPMorgan and Real Mex didn’t return calls seeking comment.

Sun Capital affiliate RM Restaurant Holding Corp. and RM Integrated Inc. bought Real Mex in 2006. Sun Capital, based in Boca Raton, Florida, has invested in more than 290 companies since the buyout firm was founded in 1995.

Tennenbaum Capital, a Los Angeles-based hedge fund with about $5 billion under management, was founded by Michael Tennenbaum in 1999. Z Capital, a private-equity firm based in Chicago founded by James Zenni, is among the creditors that took control of cookie chain Mrs. Fields Famous Brands LLC last year.

--Editors: Elizabeth Wollman, Romaine Bostick

To contact the reporters responsible for this story: Jonathan Keehner in New York at jkeehner@bloomberg.net.

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


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