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CALIFORNIA PIZZA: Hires Guggenheim Securities as Investment Banker

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California Pizza Kitchen, Inc. and its debtor affiliates seek authority from the United States Bankruptcy Court for the Southern District of Texas to hire Guggenheim Securities, LLC as their investment banker.

The firm’s services will include:

a. review and analysis of the business, financial condition and prospects of the Debtors;

b. evaluate the liabilities of the Debtors, its debt capacity and its strategic and financial alternatives;

c. In connection with any Transaction:

i. evaluate from a financial and capital markets point of view of alternative structures and strategies for implementing the Transaction;

ii. prepare offering, marketing or other transaction materials concerning the Debtors and the Transaction for distribution and presentation to the relevant Transaction Counterparties;

iii. develop and implement a marketing plan with respect to such Transaction;

iv. identify and solicit of, and the review of proposals received from, the relevant prospective Transaction Counterparties; and

v. negotiate the Transaction;

d. If the Debtors determines to pursue or effect a Transaction in connection with a Bankruptcy Case:

i. provide financial advice and assistance to the Debtors in developing and seeking approval of the Transaction, including a Plan, which may be a plan under chapter 11 of the Bankruptcy Code confirmed in connection with any Bankruptcy Case in Bankruptcy Court; and

ii. participate in hearings before any applicable Insolvency Authority with respect to the matters upon which Guggenheim Securities has provided advice, including, as relevant, coordinating with the Debtors’s legal counsel with respect to testimony in connection therewith.

The firm will be compensated as follows:

a. Monthly Fees.

i. The Debtors will pay Guggenheim Securities a non-refundable Monthly Fee of $150,000 per month, which will be due and paid by the Debtors in advance on the first day of each month during the period of Guggenheim Securities’ engagement under the Engagement Letter, in each case, whether or not any Transaction is consummated.

ii. Commencing with the sixth Monthly Fee actually paid under the Engagement Letter, an amount equal to 50 percent of the Monthly Fees actually paid to Guggenheim Securities shall be credited against any Transaction Fee that thereafter becomes payable pursuant to Sections 4(b), 4(c) or 4(d) of the Engagement Letter (it being understood that, once credited against any one of the foregoing fees, any such amount of the Monthly Fee so credited cannot be credited again against any other fee payable under the Engagement Letter).

b. Restructuring Transaction Fee.

i. If any Restructuring Transaction is consummated, the Debtors will pay Guggenheim Securities a Restructuring Transaction Fee in an amount equal to $5,250,000, unless such Restructuring Transaction is effected following the commencement of a Bankruptcy Case, in which case the Restructuring Transaction Fee shall equal $3,500,000.

ii. Any such Restructuring Transaction Fee will be payable promptly upon the consummation of any Restructuring Transaction; provided, however, that (x) in connection with any Restructuring Transaction that is contemplated to be consummated in connection with a pre-packaged, prearranged or similar Plan in a Bankruptcy Case, the Restructuring Transaction Fee will be deemed fully earned by Guggenheim Securities prior to the commencement of the Bankruptcy Case, it being understood that (1) in connection with a pre-packaged or similar Plan, 100 percent of the Restructuring Transaction Fee and (2) in connection with a pre-arranged or similar Plan, only 50 percent of the Restructuring Transaction Fee will, in the case of each of the foregoing clauses (1) and (2), be paid by the Debtors to Guggenheim Securities prior to the commencement of such Bankruptcy Case (with the balance thereof, in connection with a pre-arranged or similar Plan, to be paid by the Debtors promptly upon the consummation of a Restructuring Transaction); provided that, in the event that any portion of the Restructuring Transaction Fee is paid in connection with such a prepackaged, pre-arranged or similar Plan in a Bankruptcy Case but a Restructuring Transaction is not thereafter consummated, then such fee previously paid shall be credited against any subsequent Transaction Fee that becomes payable under the Engagement Letter by the Debtors to Guggenheim Securities or, if not able to be so credited, shall be returned to the Debtors, and (y) the Restructuring Transaction Fee in connection with any Restructuring Transaction that is contemplated to be effectuated pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), will be fully earned and payable on the date that definitive offer documents for the related exchange offer under Section 3(a)(9) of the Securities Act are first distributed to creditors whose claims would be affected thereby, without regard to the results of such exchange offer or any other contingency. For the avoidance of doubt, the fee payable under clause (y) above will be the only Restructuring Transaction Fee payable under the Engagement Letter with respect to any Restructuring Transaction effectuated pursuant to Section 3(a)(9) of the Securities Act.

c. Financing Fee(s).

i. If any Financing Transaction is consummated, then, in each case, the Debtors will pay Guggenheim Securities one or more Financing Fees in an amount equal to the sum of:

A. 125 basis points (1.25 percent) of the aggregate face amount of any debt obligations to be issued or raised by the Debtors in any Debt Financing (including the face amount of any related commitments) that is secured by first priority liens over any portion of the Debtors’s assets, plus

B. 250 basis points (2.50 percent) of the aggregate face amount of any debt obligations to be issued or raised by the Debtors in any Debt Financing (including the face amount of any related commitments) that is not covered by Section 4(c)(i)(A) of the Engagement Letter, plus

C. 400 basis points (4 percent) of the aggregate amount of gross proceeds raised by the Debtors in any Equity Financing, plus

D. with respect to any other securities or indebtedness issued that is not otherwise covered by Sections 4(c)(i)(A) to 4(c)(i)(C) of the Engagement Letter, such financing fees, underwriting discounts, placement fees or other compensation as customary under the circumstances and mutually agreed in advance by the Debtors and Guggenheim Securities.

ii. Financing Fees for any Financing Transaction will be payable upon the consummation of the related Financing Transaction; provided, however, that with respect to any Financing Transaction that is contemplated to be consummated in connection with a pre-packaged, pre-arranged or similar Plan relating to a Bankruptcy Case, the Financing Fee will in any event be fully earned and paid by the Debtors prior to the commencement of such applicable Bankruptcy Case.

d. Sale Transaction Fee(s).

i. If any Sale Transaction is consummated, then, in each case, the Debtors will pay Guggenheim Securities a Sale Transaction Fee on account of such Sale Transaction in an amount equal to the sum of: (x) with respect to the first $400,000,000 of cumulative Aggregate Sale Consideration involved in all Sale Transactions since the effective date of the Engagement Letter, 1.45 percent of said category of Aggregate Sale Consideration involved in such Sale Transaction, plus (y) with respect to any additional amount of Aggregate Sale Consideration involved in all Sale Transactions since the effective date of the Engagement Letter, 1.85 percent of said category of Aggregate Sale Consideration involved in such Sale Transaction.

ii. Any such Sale Transaction Fee will be payable promptly upon the consummation of any Sale Transaction; provided, however, that (x) in connection with any Restructuring Transaction that is contemplated to be consummated in connection with a pre-packaged, prearranged or similar Plan in a Bankruptcy Case, the Sale Transaction Fee will be deemed fully earned by Guggenheim Securities prior to the commencement of the Bankruptcy Case, it being understood that (1) in connection with a prepackaged or similar Plan, 100 percent of the Sale Transaction Fee and (2) in connection with a pre-arranged or similar Plan, only 50 percent of the Sale Transaction Fee will, in the case of each of the foregoing clauses (1) and (2), be paid by the Debtors to Guggenheim Securities prior to the commencement of such Bankruptcy Case (with the balance thereof, in connection with a pre-arranged or similar Plan, to be paid by the Debtors promptly upon the consummation of a Sale Transaction); provided that, in the event that any portion of the Sale Transaction Fee is paid in connection with such a pre-packaged, pre-arranged or similar Plan in a Bankruptcy Case but a Sale Transaction is not thereafter consummated, then such fee previously paid shall be credited against any subsequent Transaction Fee that becomes payable under the Engagement Letter by the Debtors to
Guggenheim Securities or, if not able to be so credited, shall be returned to the Debtors.

Stuart Erickson, a senior managing director at Guggenheim Securities, disclosed in court filings that the firm is a “disinterested person” within the meaning of Section 101(14) of the Bankruptcy Code.

The firm can be reached through:

Stuart Erickson
Guggenheim Securities LLC
330 Madison Avenue
New York, NY 10017
Telephone: (212) 739-0700

California Pizza Kitchen

California Pizza Kitchen, Inc., is a casual dining restaurant chain that specializes in California-style pizza. Since its opening in Beverly Hills in 1985, California Pizza Kitchen has grown from a single location to more than 200 restaurants worldwide. Although California Pizza Kitchen’s dine-in restaurants are the primary way it serves its customers, the restaurant chain also has a number of “off-premises” services and licensing agreements that allow customers to get their favorite dishes on the go. For more information, visit http://www.cpk.com/

California Pizza Kitchen and its affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-33752) on July 29, 2020. In the petitions signed by CEO James Hyatt, Debtors were estimated to have assets in the range of $100 million to $500 million and $500 million to $1 billion in debt.

Judge Marvin Isgur oversees the cases.

The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis International LLP as bankruptcy counsel, Jackson Walker LLP as local counsel, Guggenheim Securities, LLC as financial advisor and investment banker, Alvarez & Marsal North America, LLC as restructuring advisor, and Hilco Real Estate LLC as real estate consultant and advisor. Prime Clerk is the claims agent.