Red Lobster is looking to attract a buyer as the struggling seafood chain tries to avoid bankruptcy, according to a report.
The fast-casual chain — known for its Bay Cheddar Biscuits and unlimited shrimp — has considered filing for Chapter 11 to restructure its growing debt, but has also been looking for a buyer in recent months, according to close sources. folder. told CNBC.
At least one company is reportedly interested in buying the company, which has 649 restaurants in the United States and has outposts in Thailand, Japan, Mexico and Ecuador.
The deal, however, never came to fruition, CNBC reported.
Red Lobster, which managed to avoid bankruptcy during the pandemic, is struggling with expensive long-term leases and rising labor costs, according to Bloomberg, which first reported on the filing. Red Lobster’s potential review last week.
Even if a buyout were to occur, it would be difficult for Red Lobster to avoid Chapter 11, according to CNBC, because many of the leases the company is seeking to exit from are notoriously difficult to modify outside of bankruptcy.
No final decision has yet been made on the bankruptcy filing and restructuring discussions are still ongoing between Red Lobster, its owner Thai Union Group Plc, major lender Fortress Investment Group and King & Spalding, the law firm who advises the restaurant on how to part ways. some of its contracts and renegotiate its leases.
Red Lobster has had several owners since opening its first outpost in Lakeland, Florida, in 1968.
More than five decades later, Thai Union Group, which previously owned only 25% of the company, took control of Orlando-based Red Lobster in 2020 after buying out Golden Gate Capital’s stake.
Golden Gate Capital bought the chain from restaurateur Darden in 2014 for $2.1 billion.
However, Thai Union Group – best known for its exports of canned and frozen seafood – wrote down its share of Red Lobster earlier this year.
The company said in a statement on its website at the time that the restaurant’s “continued financial needs no longer align with Thai Union’s capital allocation priorities.”
“The combination of the COVID-19 pandemic, continued industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster , resulting in prolonged negative financial contributions to Thai Union and its shareholders,” added Thiraphong Chansiri, head of Thai Union Group.
Thai Union Group also reported that it recorded a stock loss of approximately $19 million in the first nine months of 2023 from Red Lobster alone.
As a result, the Thailand-based company included a $530 million non-cash impairment charge in its fourth-quarter earnings report for its investment in Red Lobster.
Representatives for Thai Union Group and Red Lobster did not immediately respond to The Post’s request for comment.
New York Post
