Case Study

AmeriServe

CLIENT: Tricon Global Restaurants (n/k/a Yum! Brands)

Gordian Group advised Yum! Brands in connection with its exposure in the AmeriServe bankruptcy, including with respect to various restructuring options, assisting in the restructuring negotiations with AmeriServe and its creditor constituencies and the negotiations that led to the sale of AmeriServe to a subsidiary of Wal-Mart.

Business Profiles

Situation

AmeriServe was an $8 billion distributor specializing in serving the fast food restaurant industry. By late 1999, AmeriServe had grown rapidly through acquisitions financed primarily with debt. At that time, following an ill-advised secured financing, AmeriServe suffered a dramatic decline in trade support, which led to a liquidity crisis and a bankruptcy filing in early 2000.Tricon Global Restaurants (n/k/a Yum! Brands) is the nationwide franchisor of Pizza Hut, Kentucky Fried Chicken and Taco Bell restaurants, and was AmeriServe’s largest customer. If AmeriServe had ceased operations due to illiquidity (as was seriously contemplated in early 2000), many of Yum! Brands’ owned and franchised stores would have "gone dark" for weeks. To avert this disastrous scenario, Yum! Brands provided a Debtor-in-Possession ("DIP") financing facility to AmeriServe. In addition to its DIP commitment, Yum! Brands had a variety of other potential exposures in the case.

Engagement

Yum! Brands engaged Gordian Group to assist in minimizing its AmeriServe-related losses and to expedite the bankruptcy restructuring process. Gordian Group advised Yum! Brands with respect to various restructuring options, assisted in the negotiations leading to a sale of AmeriServe to a subsidiary of Wal-Mart and assisted in the restructuring negotiations with the Debtor and various creditor constituencies.

Outcome

The case was successfully consummated in December 2000.