Hooters seeks $40M in financing as founders reach deal to take over

The Clearwater founders of the Hooters restaurant chain and another franchisee have agreed to buy more than 100 restaurants belonging to Hooters of America — a separate business that filed for bankruptcy this week.

The complicated deal also calls for Clearwater-based Hooters Inc., which is a part of HMC Hospitality, and Hoot Owl Restaurants, to take over the operations of restaurants operated by the main company and operate them as Hooters Brand Management.

The two franchisees currently own and operate more than 30% of the franchised Hooters locations in the U.S., including 14 of the 30 highest volume restaurants.

A Hooters Inc. spokesperson says in an email that “we have no comment on the financial specifics regarding the restructuring agreement.”

Hooters of America filed for Chapter 11 bankruptcy March 31 and is seeking approval of $40 million of debtor-in-possession financing from existing lenders, including $35 million of new capital, in order to continue operating during the restructuring, records show.

If the bankruptcy and the restructuring go through as envisioned, Hooters of America says in a statement that when it exits bankruptcy all its restaurants will be owned by franchisees.

According to its website, Hooters of America has 420 franchised and company owned restaurants in 42 states and 29 countries.

If the agreement is approved, Hooters Inc. and Delaware-based Hoot Owl will own and operate the restaurant the entities bought jointly and operate Hooters of America’s remaining locations as Hooters Brand Management.

HBM, which will not own any of the restaurants, the spokesperson says, will be the support system for franchise operations performing duties that include national advertising, central purchasing, franchise development and support and "other key franchise functions."

Hooters of America says in the statement that the restructuring agreement has “near unanimous support from its key stakeholders.”

Given the bankruptcy was only filed this week, it will take a bit of time for the final details of the agreement, including the total number of restaurants to be sold to the franchisees, to be finalized and approved by the judge overseeing the case.

A hearing date on the agreement has not been set, the Hooters Inc. spokesperson says.

Clearwater-based HMC Hospitality, which includes Hooters Inc., founded the Hooters restaurant chain with a single restaurant that opened at 2800 Gulf-to-Bay Blvd. Oct. 4, 1983.

It currently operates 22 restaurants in the Tampa Bay area and in metro Chicago and is opening two locations this year in Florida, including one in Pasco County.