Facing a $2 million loan payment due at the end of the month and nearly $1 billion in debt, CEC Entertainment, the Irving-based parent company of Chuck E. Cheese and Peter Piper Pizza, is in talks with lenders to raise money to avoid bankruptcy while at the same time paying out nearly $3 million in executive awards as part of key employee retention deals.
The restaurant chain and kids' party venue, like so many other restaurants and businesses, was hit hard by the coronavirus pandemic. Full-service restaurants lost about 80% of their average revenue at the peak of the pandemic.
Prior to that though, the company still carried nearly $1 billion in debt on their balance sheet through the fourth quarter 2019. The Wall Street Journal reports the company is considering whether to make a quarterly $1.9 million loan payment at the end of the month while talking with lenders about funding another loan as stores begin to reopen.
On Friday, June 5, the company filed Form 8-K with the SEC to announce KERP (key employee retention plan) agreements with 28 employees, including CEO David McKillips, President J. Roger Cardinale and EVP/CFO James Howell. The forms are filed with the SEC to announce major events that shareholders should know about.
The company said the retention agreements for all employees except Cardinale are for the duration of the earlier of 12 months or 30 days following the effective date of restructuring. Cardinale's agreement is until Sept. 30.
According to the form, McKillips will be paid a retention award of $1.3 million, Cardinale $900,000 and Howell $675,000. The retention awards are in lieu of any bonuses or long-term incentive awards they would otherwise be due to receive under their employment agreement.
The company has not yet publicly announced any restructuring or bankruptcy plan.
CEC Entertainment, founded under the name ShowBiz Pizza Place, changed its name in 1998. Today they operate both the Chuck E. Cheese and Peter Piper Pizza brands.
The Company and its franchisees operate a system of more than 600 Chuck E. Cheese and more than 120 Peter Piper Pizza venues, with locations in 47 states and 16 foreign countries and territories.