Uno CEO Frank Guidara maintains that the bankruptcy filing will position the company for future growth.
Uno Restaurant Holdings Corp. CEO Frank Guidara never envisioned guiding a company into Bankruptcy Court.
But Guidara maintains that Uno’s Chapter 11 bankruptcy filing in New York on Wednesday will strongly position the West Roxbury-based company for future success once it can unshackle itself from a heavy debt load. He said the bankruptcy filing – which would convert $142 million in debt into a controlling stake in Uno for the investors who hold that debt – would clear the biggest impediment to Uno’s growth.
“Once we get through this, we’re going to have the resources and flexibility to capitalize on numerous opportunities out there,” Guidara said. “Ours is not a concept problem. It’s a balance sheet problem.”
The chain slimmed down in anticipation of the bankruptcy, closing 16 Uno Chicago Grill restaurants last week – including locations in Kingston, Fairhaven and Methuen – and cutting about 700 full- and part-time positions at those restaurants.
Guidara said he doesn’t expect any additional closures among its 99 remaining corporate-owned restaurants. The company employs nearly 5,800 people among its restaurants, corporate headquarters and factory in Brockton. Guidara also said the bankruptcy will not affect the 76 Uno Chicago Grill and two Uno Due Go eateries owned by franchisees.
The Uno Chicago Grill chain made dramatic changes to improve its menu in the past five years, moving the casual restaurant chain beyond a focus on pizza and earning recognition for its array of healthy choices.
The chain started to see some benefits from the menu changes, but they weren’t occurring quickly enough. Louie Psallidas, Uno’s chief financial officer, said in a Bankruptcy Court affidavit that Uno experienced a significant decline in sales in the past few years because of the national recession.
Uno put strict cost controls in place in 2008, severely limiting new restaurant openings and travel and training costs. But the company still lost $15.1 million in its 2008 fiscal year and $22.2 million in 2009.
Psallidas said Uno executives began exploring ways to restructure its balance sheet last June. Eventually, Uno reached an agreement with a group of its bondholders to swap their debt for stock in the company through a bankruptcy filing.
The company has asked the Bankruptcy Court to allow it to continue to fund consumers’ gift cards and similar promotions while it remains in bankruptcy.
Guidara said it could take the company 90 to 120 days to emerge from bankruptcy. He expects that the current management team will remain in place.
Guidara said Centre Partners Management, which controls a majority stake in Uno, will end up with just a small fraction of the privately held company’s shares after the company emerges from bankruptcy.
Centre, a New York private equity firm, bought a controlling stake in Uno in 2005 as Guidara was recruited from Au Bon Pain to run Uno. Company founder Aaron Spencer kept a smaller stake in Uno after the 2005 sale.
Guidara said he met with employees at the West Roxbury headquarters office Wednesday morning to discuss the Chapter 11 bankruptcy filing.
“It’s not something I ever wanted to be associated with,” Guidara said. “(But) once I got into the meat of it, I learned there are good Chapter 11s and bad Chapter 11s. This is a good Chapter 11.”
Jon Chesto may be reached at firstname.lastname@example.org.