Red Lobster is reportedly trying to find a buyer as the struggling seafood chain tries to avoid bankruptcy.
The fast-casual chain, known for its Cheddar Bay biscuits and all-you-can-eat shrimp, had been considering filing for Chapter 11 to restructure its mounting debt but had been looking for a buyer in recent months, people said. revealed.Said CNBC.
According to reports, at least one company had expressed interest in acquiring the company. The company has 649 restaurants in the United States, as well as locations in Thailand, Japan, Mexico and Ecuador.
However, the deal never materialized, CNBC reported.
Bloomberg, which first reported on Red Lobster’s potential bankruptcy filing last week, said Red Lobster avoided bankruptcy during the pandemic but is plagued by long, expensive leases and rising labor costs.
According to CNBC, even if an acquisition were to take place, it would be difficult for Red Lobster to avoid Chapter 11. Many of the leases the company is exiting from are notoriously difficult to change outside of bankruptcy.
A final decision on the bankruptcy filing has not yet been made, and Red Lobster, its owner Thai Union Group, its main lender Fortress Investment Group, and the company that advised the restaurant on its restructuring Restructuring discussions are currently underway between the law firm King & Spalding. Remove parts of the contract and renegotiate the lease.
Red Lobster has had multiple owners since its first outpost opened in 1968 in Lakeland, Florida.
More than 50 years later, Thai Union Group, which previously owned just 25% of the company, acquired Orlando-based Red Lobster in 2020 after purchasing Golden Gate Capital’s stake. took control of the business.
Golden Gate Capital acquired the chain from restaurateur Darden in 2014 for $2.1 billion.
But Thai Union Group, best known for exporting canned and frozen seafood, wrote down its stake in Red Lobster earlier this year.
The company said in a document: statement The restaurant’s “ongoing financial requirements are no longer consistent with the Thai Union’s capital allocation priorities,” the website said.
Thai Union Group Chief Thirapong Chansiri said: “The COVID-19 pandemic, continuing industry headwinds, rising interest rates, and rising material and labor costs are impacting Red Lobster; “The financial contribution to Thai Union and its shareholders has been negative for a long time,” he added.
Thai Union Group also noted that Red Lobster alone recorded a stock loss of approximately $19 million in the first nine months of 2023.
As a result, the Thailand-based company recorded a $530 million non-cash impairment charge on its investment in Red Lobster in its fourth quarter earnings report.
Representatives for Thai Union Group and Red Lobster did not immediately respond to The Post’s requests for comment.
