Creditors to CEC Entertainment Inc., which runs Chuck E. Cheese and Peter Piper Pizza, are weighing restructuring options including bankruptcy as the company seeks to get through the pandemic that has shuttered its locations, Bloomberg News reported. Lenders and bondholders are considering putting new money into the business to keep it afloat, according to people familiar with the matter who asked not to be identified discussing a private matter. Both in and out-of-court options to tame the company’s debt load are being discussed, said the people, noting that the situation is evolving as states across the country mull whether to lift stay-at-home orders. A chapter 11 filing would allow CEC, acquired by private equity firm Apollo Global Management Inc. in a 2014 leveraged buyout, to keep some locations operating and permanently close weaker ones to minimize costs. Chuck E. Cheese alone has over 600 outlets, which would be evaluated for closures as part of the potential court-supervised process, the people said. A group of bondholders has suggested putting $100 million of new money into the firm, extending maturities and adding a payment-in-kind option to give the firm more flexibility. While a proposal was sent to the company, holders haven’t been asked to sign non-disclosure agreements, the people added. PIK notes allow companies to borrow more in lieu of making interest payments, which can help firms facing liquidity pressure. Lenders also organized with advisers and are contemplating putting in new money to support their investment in the company. The group hasn’t sent any formal proposals to CEC, but some parties have discussed new financing of around $200 million as an option to rework the balance sheet.
