BOSTON, Sept. 28, 2016 (GLOBE NEWSWIRE) -- Cosi, Inc. (NASDAQ:COSI), the fast-casual restaurant company, today
announced that it and its subsidiaries filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District
of Massachusetts, initiating a process intended to preserve value and accommodate an orderly going-concern sale of Cosi’s business
operations.
Cosi has obtained approximately $4 million in post-petition debtor-in-possession (DIP) financing, which, subject to Bankruptcy
Court approval, will provide the Company with liquidity to maintain its operations in the ordinary course of business during the
Chapter 11 process.
Prior to the Chapter 11 filing, Cosi entered into a non-binding term sheet with its lenders, AB Opportunity Fund LLC, AB Value
Partners, L.P., and one or more entities affiliated with Milfam II L.P., pursuant to which the DIP lenders or their designees have
proposed to purchase substantially all of Cosi’s assets and, subject to Bankruptcy Court approval, would serve as the “stalking
horse” in a sale process under Section 363 of the Bankruptcy Code. The term sheet is non-binding and the transaction
contemplated thereby is subject to, among other things, Cosi’s compliance with certain covenants. Cosi intends for such a
sale, if completed, to ensure a smooth and swift transition of the business and operations to the DIP Lenders or their designees,
which would be supported by a stronger balance sheet due to exiting underperforming locations and once company assets are sold free
of any claims.
In accordance with the sale process under Section 363 of the Bankruptcy Code, notice of the proposed sale to the DIP lenders or
their designees will be given to third parties and competing bids will be solicited. Cosi’s Board of Directors will manage the
bidding process and evaluate the bids, in consultation with independent professional advisors and as overseen by the Bankruptcy
Court.
Cosi’s Board of Directors unanimously determined that a sale in Chapter 11 is in the best interest of the Company and its
creditors. The process allows Cosi to continue normal business operations during the Bankruptcy Court supervised sale
process.
“We worked very hard to avoid this step,” said Mark Demilio, Cosi’s Chairman of the Board. “With the advice and support of
outside advisors, we’ve explored multiple paths, including raising capital through equity and/or debt in either public or private
transactions, selling the Company outside the bankruptcy process, selling certain assets of the Company, and other transactions to
restructure the balance sheet or raise capital, while also focusing on attempting to improve sales, reduce costs, and exit
underperforming locations. It’s become clear that, despite the extensive efforts by the Company, no such transactions are
achievable at this time, that the Company cannot continue to operate in its current financial condition, and that the best
alternative for the Company and its creditors would be to accomplish a sale through the bankruptcy process.”
Prior to the Chapter 11 filing, the Company closed 29 of its 74 Company-owned restaurants. The 31 franchised locations are
unaffected. The plan outlines a fast-track process that will allow Cosi to emerge from the restructuring under new ownership and
with an improved financial position and stronger brand.
“This was a difficult step, but it was necessary to address our liquidity issues," said Patrick Bennett, Sr., interim CEO of
Cosi, Inc. “Cosi’s core business and franchise base remain intact, and we filed with the liquidity resources necessary to
carry out the restructuring plan. We believe this process will allow the Company to right-size its balance sheet, reduce its
debt, and focus on improving the business and stabilizing the brand,” Bennett stated.
Court filings and other information related to the restructuring proceedings are available on the Company’s website at www.getcosi.com.
Mirick, O’Connell, DeMallie & Loungee, LLP is serving as legal counsel, and the Company will appoint a Chief Restructuring
Officer within 7-10 days. Patrick Bennett continues to serve as interim CEO, and Edward Schatz of The O’Connor Group, Inc.
continues to serve as interim CFO.
About Così, Inc.
Così (http://www.getcosi.com) is an international fast casual restaurant company. At the heart
of every Cosi® restaurant is an open-flame stone-hearth oven where the Così® signature flatbread is made from scratch
throughout the day. The flatbread is made from a generations-old recipe and is part of many Così® favorites.
Così® was founded on the idea that good-for-you food should be delicious. Menu items are made using fresh
ingredients and distinctive sauces and spreads to create edgy flavors. The menu features made-to-order sandwiches,
hand-tossed salads, bowls, breakfast wraps, melts, all natural soups, signature Squagels®, artisan flatbread pizzas,
S`mores, snacks and desserts. Guests can also enjoy handcrafted beverages and a variety of coffee-based and specialty
beverages.
Così® employees create a welcoming environment where guests are invited to relax and enjoy great
food. In many cases, Così® is the cornerstone of the communities that they are in and take pride in supporting
community organizations and local charities. There are currently 45 Company-owned and 31 franchise restaurants operating in
fourteen states, the District of Columbia, Costa Rica and the United Arab Emirates.
"Così," "(Sun & Moon Design)" and related marks are registered trademarks of Così, Inc. in the U.S.A. and certain other
countries. Copyright © 2016 Così, Inc. All rights reserved.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This press release contains statements that
constitute forward- looking statements under the federal securities laws. Forward-looking statements are statements about future
events and expectations and not statements of historical fact. The words "believe," "may," "will," "should," "anticipate,"
"estimate," "expect," "intend," "objective," "seek," "plan," "strive," or similar words, or negatives of these words, identify
forward- looking statements. We qualify any forward-looking statements entirely by these cautionary factors. Forward-looking
statements are based on management's beliefs, assumptions and expectations of our future economic performance, taking into account
the information currently available to management. Forward-looking statements involve risks and uncertainties that may cause our
actual results, performance or financial condition to differ materially from the expectations of future results, performance or
financial condition we express or imply in any forward-looking statements. Factors that could contribute to these differences
include, but are not limited to: the results being reported in this release are unaudited and subject to change; the cost of our
principal food products and supply and delivery shortages and interruptions; labor shortages or increased labor costs; changes in
demographic trends and consumer tastes and preferences, including changes resulting from concerns over nutritional or safety
aspects of beef, poultry, produce, or other foods or the effects of food-borne illnesses, such as E. coli, "mad cow disease" and
avian influenza or "bird flu"; competition in our markets, both in our business and in locating suitable restaurant sites; our
operation and execution in new and existing markets; expansion into new markets including foreign markets; our ability to attract
and retain qualified franchisees and our franchisees' ability to open restaurants on a timely basis; our ability to locate suitable
restaurant sites in new and existing markets and negotiate acceptable lease terms; the rate of our internal growth and our ability
to generate increased revenue from our existing restaurants; our ability to generate positive cash flow from existing and new
restaurants; fluctuations in our quarterly results due to seasonality; increased government regulation and our ability to secure
required government approvals and permits; our ability to create customer awareness of our restaurants in new markets; the
reliability of our customer and market studies; cost effective and timely planning, design and build out of restaurants; our
ability to recruit, train and retain qualified corporate and restaurant personnel and management; market saturation due to new
restaurant openings; inadequate protection of our intellectual property; our ability to obtain additional capital and financing,
including debtor-in-possession (DIP) financing; our success in restructuring the Company; our success in finding a purchaser of our
assets; adverse weather conditions which impact customer traffic at our restaurants; and adverse economic conditions.
Further information regarding factors that could affect our results and the statements made herein are included in our filings
with the Securities and Exchange Commission.
Additional information is available on Così's website at
http://www.getcosi.com in the investor relations section.
CONTACT: nikki@nikkirichardson.com CO / Greenough 978.256.1651