Family Entertainment Centers Inc., which owns 12 Chuck E. Cheese restaurants in Virginia and Maryland, has announced that its pending bankruptcy proceedings will force the publicly held company to go private.
The Rockville-based company, which filed for bankruptcy protection in August owing its creditors $7.6 million, said that its lead banks and creditors committee appears ready to adopt a reorganization plan that will discontinue the company's public status.
"Although it is premature to describe the details of the proposed plan, . . . under no reasonable set of circumstances can it be anticipatd that the company's shareholders will retain their interest in the reorganized debtor," the company announced.
As a result, the company last week asked that trading in its stock, then selling for 13 cents a share, be halted. Shares in the company had been sold publicly for less than two years, with the high at about $12.75 a share.
Despite the reorganization, company officials said its 12 Chuck E. Cheese's Pizza Time Theatres will continue to operate. However, company officials hae noted that they ultimately want to reduce the number of restaurants to five or six.
Chuck E. Cheese Pizza is a nationwide chain that offers customers pizza and video games. Family Entertainment Centers was the largest and most successful franchise of these outlets, which started springing up across the country four years ago.But beginning last May, sales began to drop, partly because of the decline in the popularity of video games and increased competition.
Although the company is generating a positive cash flow from operations, it has said that it is not earning enough to repay its debt.