April 8, 2020 – Privately held TZEW Holdco LLC and six affiliated Debtors (dba Apex Parks Group, "Apex" or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 20-10910. The Debtors, a California-based operator of amusement parks, are represented by Laura Davis Jones of Pachulski Stang Ziehl & Jones LLP. Further board-authorized engagements include (i) Imperial Capital LLC as investment banker and financial advisors, (ii) Paladin Management Group LLC as restructuring advisors and (iii) Kurtzmann Carson LLC as claims agent.
The Debtors’ lead petition notes between 5,000 and 10,000 creditors; estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $100.0mn and $500.0mn. Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) Store Master Funding VII, LLC ($1.6mn landlord debt), (ii) BK of Destin ($442k landlord debt) and (iii) Turnstile, Inc. ($372k landlord debt).
Formed in 2014 with the stated aim of "growing aggressively through acquisitions," the Debtors' principal shareholders include:
- BSP Partners I (Carlyle?): 43.3% (two related entities hold an additional 3.79%)
- EGCP III L.P. (The Edgewater Funds): 26.64% (one related entity holds an additional 3.14%)
- Global Investors Fund LLC (St Thomas USVI): 11.46%
The Debtors website notes: "We’re partnered with two private equity firms, The Carlyle Group in New York and The Edgewater Funds in Chicago."
The Debtors' press release announcing the filing, actually downplays the the impact of the COVID-19 pandemic (all of its parks are closed) and focuses on pre-coronavirus market headwinds and operational challenges as the more significant factors in forcing the Debtors to seek Chapter 11 shelter. The story being told here, by Debtors looking to market a going concern business, is that with both COVID-19 (short-term illness) and unserviceable debt (long-term illness) gone, this is fundamentally a good business.
The press release states: “[We are] pursuing a comprehensive financial restructuring comprehensive financial restructuring aimed at reducing the Company's current debt and, ultimately, enhancing operations to continue to serve guests and communities for years to come. As part of this process, Apex expects to enter into a stalking horse purchase agreement ('Agreement') with the Company's prepetition secured lenders ('Lenders') to sell substantially all of the Company's assets and operations and has filed for Chapter 11 of the United States Bankruptcy Code in the District of Delaware to facilitate the sale. The Lenders will also provide financing to support the Company during the restructuring."
The press release continues: “Apex has faced a number of challenges in recent years, including increased industry competition and consolidation, extensive operational expenditures and the seasonal nature of the business. To address these challenges, we have implemented numerous operational initiatives to increase profitability; however, despite these efforts and the hard work of our team members, continuing market headwinds and operational challenges have prevented us from meaningfully improving financial performance. After an exhaustive examination of all options, we've determined that a sale of the Company through the Chapter 11 process is the best path forward to enable Apex to focus on future operational transformation and growth.
The Chapter 11 process will not affect the operations of Apex's 10 family entertainment centers and two water parks in California, Florida, and New Jersey. The Company has temporarily closed all locations in accordance with federal and local government mandates and CDC guidelines to proactively protect guests and employees in response to the COVID-19 pandemic but expects to return to operating in the ordinary course upon reopening of the locations."
About the Debtors
According to the Debtors: "Apex Parks Group is a privately held operating company based in Aliso Viejo, California. We were founded in 2014 when the company acquired 14 Family Entertainment Centers in multiple states, and the Big Kahuna’s water park in Destin, Florida. The company’s goal is to continue to acquire similar family entertainment venues and through investment in people, products, and efficient processes, grow the profitability of each park while maintaining our core values of safety, guest satisfaction, and employee teamwork.
According to a 2011 International Association of Amusement Parks survey, 25% of Americans surveyed visited an amusement park within the last 12 months, with 43 percent of Americans indicating they plan to visit in the next 12 months. Consumers have a desire to get out of the house for fun, but want their entertainment dollars to represent a good value for the entire family. In America, people visit amusement parks nearly 300 million times each year and generate more than $12 billion in revenue."
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The post TZEW Holdco LLC – Amusement Park Operator Apex Parks Group Files Chapter 11, Looks Past COVID-19 to Delevered Going Concern Business, Prepetition Lenders to Serve as Stalking Horse appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.