The largest operator of Pizza Hut restaurants in the world saw its debt plunge further into distress after second-quarter results showed the franchisee inching closer to breaching the terms of its bank credit lines, Bloomberg News reported. Closely held NPC International Inc. reported in a private release to lenders earlier this month that its total debt rose to 6.9 times a measure of earnings, just below the threshold that would trigger a default under the company’s revolver. The ratio stood at around 6.3 times in the first quarter. NPC’s owners, including Todd Boehly’s Eldridge Industries LLC, have injected $17.5 million of cash into the business this year to help keep it in compliance with covenants. NPC has struggled with rising labor and food costs at a time when it’s seeking to invest in storefronts focused on delivery and move away from traditional dine-in restaurants. The sell-off in the company’s debt has accelerated since the Aug. 9 disclosure, with its first and second-lien loans now being quoted at about 70 and 50 cents on the dollar, according to data compiled by Bloomberg.
