Friendly's Enters Chapter 11 To Implement Quick Financial Restructuring 424 Restaurants Open for Business as Usual; Manufacturing and Distribution Operations Not Impacted

Company Receives Commitment for Approximately $70 Million in Financing

Company Closes 63 Underperforming Restaurants

WILBRAHAM, Mass., Oct. 5, 2011 /PRNewswire/ -- Friendly Ice Cream Corporation and its subsidiaries (collectively "Friendly's"), the operator of Friendly's restaurants and a nationwide distributor of ice cream products, announced today that the Company has filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.  As part of the filing, Friendly's will enter a 363 sale process with an affiliate of its current owners, Sun Capital Partners, as the lead or "Stalking Horse" bidder to quickly restructure the Company and emerge stronger and more competitive.

424 Friendly's restaurants will be open for business as usual during the Company's financial restructuring and there is expected to be no impact to manufacturing and distribution operations.

Friendly's has secured approximately $70 million in debtor-in-possession (DIP) financing, which, along with the Company's cash flow, will provide the working capital necessary to meet its ongoing obligations during the restructuring.  The Company expects to be able to continue paying employee salaries and benefits, meet the needs of its guests and retail customers and honor all gift cards.

The decision to financially restructure through a Chapter 11 filing was driven largely by the challenges of the current economic downturn, significantly increased costs, particularly in commodities such as cream, rents that exceed current market rates and certain of the Company's current unrelated liabilities.  The filing will provide Friendly's with the tools and time to strengthen its balance sheet, close underperforming restaurants, revisit certain agreements and reposition the Company for long-term success.  

"We have embarked on an aggressive campaign to enhance restaurant operations, improve the guest experience, strengthen our team and expand the Company's successful retail ice cream business," said Harsha V. Agadi, Chairman & CEO of Friendly's. "I am particularly pleased with the enthusiastic response among our guests and employees to the recently launched 'High Five' campaign which not only provides great meal values but is also revitalizing our brand in the marketplace.

"Thanks to our dedicated employees and franchisees, we have made a lot of progress, but our Company continued to face significant financial challenges. This was exacerbated by the weak economy and rapidly rising commodity costs that have impacted the entire restaurant industry. The strategic decision to pursue a financial restructuring will allow us to proactively and quickly improve our financial position and ensure we have the resources to build a better and stronger Friendly's for our loyal guests, retail customers, suppliers and other business partners."

As part of its restructuring, Friendly's has closed 63 restaurants (see attached list).  After a thorough analysis of the profitability and contribution of all Friendly's locations, including the lease costs involved, the Company made the difficult but necessary decision to close underperforming restaurants.  These closures will help the Company realize important cost savings and operational efficiencies that will improve its financial foundation so it can better serve all constituencies. Friendly's has encouraged employees from closed locations to apply at nearby operating restaurants, where available.

Friendly's has appointed the independent financial advisory and investment banking firm, Duff & Phelps, to serve as exclusive financial advisor in connection with the sale of the Company's assets pursuant to Section 363 of the United States Bankruptcy Code.  All inquiries with respect to the Section 363 sale process should be made to Joshua Benn, Managing Director at Duff & Phelps, who can be reached at (212) 450-2840, or Joshua.Benn@duffandphelps.com.

About Friendly Ice Cream Corporation

Friendly Ice Cream Corporation is a vertically integrated restaurant company serving signature sandwiches, entrees and ice cream desserts in a friendly, family environment with system-wide sales of $700 million and distribution through more than 7,000 retail locations. With a 76-year operating history, Friendly's enjoys strong brand recognition and is currently revitalizing its restaurants and introducing new products to grow its customer base. For additional information, please visit www.friendlys.com.

List of Closed Friendly's Locations

Location

City

State

Boston Post Rd.

Guilford

CT

Buckland Mall

Manchester

CT

Main St.

Meriden

CT

Storrs Rd./University Plaza

Storrs

CT

E. Main St.

Torrington

CT

Waterbury Shopping Plaza

Waterbury

CT

South Main St.

West Hartford

CT

SR 64 East

Bradenton

FL

Citrus Tower Blvd.

Clermont

FL

Eustis Plaza

Eustis

FL

S. Babcock St.

Melbourne

FL

Collegiate Way

Orlando

FL

University Parkway

Sarasota

FL

Massachusetts Ave.

Acton

MA

Pleasant St.

Attleboro

MA

Boston Rd.

Billerica

MA

Broad St.

Bridgewater

MA

Belmont St.

Brockton

MA

Austin St.

Charlestown

MA

East St.

Chicopee

MA

Providence Pike

Dedham

MA

John Fitch Plaza

Fitchburg

MA

Central St.

Foxboro

MA

Federal St.

Greenfield

MA

Hanover Mall

Hanover

MA

Mall at Whitney Field

Leominster

MA

Monument Square

Leominster

MA

Main St.

Medfield

MA

Chestnut St.

Needham

MA

Independence Ave.

Quincy

MA

Main St.

Southbridge

MA

Wilbraham Rd.

Springfield

MA

Washington St.

Stoughton

MA

Broadway

Taunton

MA

Main St.

Ware

MA

Cranberry Highway

Wareham

MA

West Boylston St.

West Boylston

MA

Main St.

West Harwich

MA

Westfield St.

West Springfield

MA

Turnpike Rd.

Westboro

MA

Church St.

Whitinsville

MA

Main St.

Worcester

MA

Park Ave.

Worcester

MA

High St.

Ellsworth

ME

Main St.

Freeport

ME

Sabattus St.

Lewiston

ME

Lafayette Rd.

Portsmouth

NH

Hamilton Plaza

Trenton

NJ

Wolf Rd.

Albany

NY

Western Ave.

Albany

NY

Delaware Ave.

Elsmere

NY

Upper Glen St.

Glens Falls

NY

Congress St.

Saratoga Springs

NY

Altamont Ave.

Schenectady

NY

Easton Rd.

Doylestown

PA

Coventry Mall

Pottstown

PA

Kingstown Rd.

Wakefield-Kingston

RI

Warwick Ave.

Warwick

RI

2960 Boulevard

Colonial Heights

VA

Fribble Way

Midlothian

VA

Patterson Ave.

Richmond

VA

Brook Rd.

Richmond

VA

Montpelier Rd.

Berlin-Barre

VT



SOURCE Friendly Ice Cream Corporation



RELATED LINKS
http://www.friendlys.com

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