The bankrupt owner of the Village Inn restaurant chain has sold its assets to a company controlled by a title-insurance provider and a private investment firm.
Denver-based Vicorp Restaurants, which filed for Chapter 11 reorganization in April, said Monday it is now owned by American Blue Ribbon Holdings.
The deal closed Friday. Vicorp wouldn’t disclose financial terms, but an asset-purchase agreement filed in bankruptcy court in January listed the price at $55 million, minus certain debts repaid before closing.
The new company will be based in Denver. It operates 25 Village Inn restaurants and employs about 1,600 people in metro Denver. Nationwide, the company has 267 restaurants in 25 states, including 90 franchised restaurants and the Bakers Square chain.
The buyers have agreed to pour in at least $25 million of their own capital and raise the rest through equity or debt financing, according to court documents.
With the cash infusion, some existing Village Inn restaurants will be remodeled, said Vicorp president and chief executive Hazem Ouf, who will retain both titles in the new company.
“The plan is to certainly begin to reinvest in the business again,” Ouf said.
High food prices and consumer spending cutbacks have pushed several restaurant chains into bankruptcy over the past year, including the parent companies of Bennigan’s and Black Angus Steak house.
Vicorp, founded in 1958, was saddled with a heavy debt load. One creditor was owed $126.5 million, according to court filings.
Vicorp shed some debt and cut costs by closing 129 restaurants, including four in Colorado. Franchisees closed another three eateries.
Denver restaurant consultant John Imbergamo said Village Inn’s well-known brand and relatively lower-cost meals might have helped attract a buyer amid the recession and extremely tight credit markets.
“Sometimes people go back to their old favorite during times like this, and Village Inn certainly would be an old favorite,” Imbergamo said.
American Blue Ribbon was formed by Jacksonville, Fla.- based title-insurance provider Fidelity National Financial and The Woodlands, Texas-based Newport Global Advisors, a unit of Providence Equity Partners.
“Despite the difficult economic conditions, the newly reshaped operations have become profitable in a short period of time and the financial restructuring provides a significantly improved balance sheet and liquidity position,” said Fidelity chairman William Foley in a prepared statement.
Andy Vuong: 303-954-1209 or avuong@denverpost.com
