Mrs. Fields Famous Brands LLC warns that it will file Chapter 11 within the next two months if it cannot persuade note holders to cut $145 million in debt by the end of June. The Salt Lake City-based franchisor of both Mrs. Fields cookies and frozen yogurt retailer, TCBY, has a high interest debt-load of over $200 million.
The firm has struggled for years to pay just the interest expense, never mind the principal of their outstanding debts. Despite selling its most profitable brands Pretzelmaker and Pretzel Time last year and The Great American Cookie to NexCen Brands earlier this year in order to receive much needed cash, the company still finds itself not able to pay $10.25 million in interest that comes due in September.
In an interview with Blue MauMau, Michael Ward, Chief Legal Officer and Executive Vice President for Mrs. Fields Cookies, says that the company has been cooking up a recipe for some time to reduce what it owes in high-interest debt. “We are executing a strategic plan that we went through a year ago,” Ward declares. “Mrs. Fields was always a highly leveraged company. There always needed to be in the whole history of the company an event that would bring down the company’s high debt.”
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Photo credit: J. Good. License: Creative Commons. Closed Mrs. Fields store in Summit Place Mall, MI