By Teri Morrow and Julie McCay Turner
UPDATE: Talking Points AM, the Boston Globe’s morning business newsletter, posted that the mystery behind yesterday’s abrupt closure has been solved: 11:27: a.m.: The weekend mystery of the suddenly closed Papa Gino’s restaurants is solved. The parent company of the Papa Gino’s and D’Angelo chains said today it has been acquired by a private equity investor. PGHC Holding of Dedham said it will close 95 of its fast-food outlets as part of a related bankruptcy filing. Terms of the sale to Wynnchurch Capital were not disclosed. Wynnchurch, based outside of Chicago, manages $2.2 billion of capital and focuses on so-called middle-market companies, which typically have annual revenue of anywhere from $100 million to several billion dollars. (Click this link to learn more)
Much to the chagrin of those who wanted pizza on Sunday, customers learned that Bedford’s Papa Gino’s store was permanently closed from a sign on the door. After learning D’Angelo’s Grilled Sandwich stores and Papa Gino’s are owned by the same entity, The Citizen’s website check and a trip to their Bedford location confirmed that D’Angelo’s is also shuttered.
The Citizen first became aware of the Papa Gino’s closing after a Bedford resident unsuccessfully tried to call in an order for a Girl Scout meeting on Sunday afternoon.
On Monday, D’Angelo’s next door neighbor, Bud Koor of Great Road Gallery and Framing at 363 The Great Road, confirmed that the Bedford store was company-owned and not a franchise location.
Professionally-printed signs on both establishments noted the closures. Reports from other news sources indicate nearly 50 Papa Gino’s stores were closed on Sunday with employees unaware of any impending closure. Papa Gino’s had approximately 150 stores listed on their website earlier this year; it now lists 97.
The Papa Gino’s sign said, “This location is now closed. Thank you for your patronage;” the sign also offered a discount code to customers ordering online from another location. Somewhat contradictory signs were posted in D’Angelo’s windows: the sign announcing the closure was balanced by another sign inviting future employees to build career success with the company.
In both stores, shelves were stocked and security lights were on.
Local social media platforms were busy late Sunday, with members sharing memories of Papa Gino’s popularity when it opened in Bedford in the 1980s along with its recent decline in quality. Alyssa Sandoval, Business Developement Director for the Town, confirmed that the store opened in 1980, with a 2008-20009 renovation that added new carpeting and reduced seating from 102 to 86 seats.
Papa Gino’s did not comment on the closings, but a web search shows that on September 21, 2018, Bunker Hill Capital announced its exit from PGHC Holdings, Inc., the parent company of both Papa Gino’s and D’Angelo quick service restaurant chains, after a 13-year partnership. (Click this link to read the full statement.)
According to their website, Bunker Hill Capital had worked closely with the senior management team of PGHC in transforming its technology platform including a new custom online ordering system for Papa Gino’s, new inventory and labor management systems for both brands, and new point of sale systems for both brands. Bunker Hill Capital transitioned board control to a new financial partner going forward.
Headquartered in Dedham, PGHC Holdings, Inc., is a leading quick-service restaurant operator with two long-standing brands: Papa Gino’s pizza restaurants and D’Angelo’s sandwich shops. Papa Gino’s is the official pizza of the New England Patriots and the New England Revolution.
A February 14, 2018, SEC form K8 filing # 001-36832 stipulates a pair of sales involving the holding companies that control Papa Gino’s and D’Angelo’s Grilled Sandwiches:
Item 1.01 Entry into a Material Definitive Agreement.
On February 14, 2018, Barington/Hilco Acquisition Corp. (“BHAC”), Pop G Food Holdings Corp. (“Holdings”) and Oreva Capital Corp. (“Oreva”), an entity associated with Sweiss Ventures, LLC (“Sweiss”), JS Equity Holdings 1 LLC, as assignee of DMZ1 Holdings, LLC (“JS Equity”), BAG Spac 1, LLC (“BAG”), PLA99, LLC (”PLA”), and Oreva Partners, LLC, (“Partner” and together with Sweiss, DMZ, BAG and PLA, collectively, the “Investors”) entered into a letter of intent (the “LOI”) with Specialty Brands Holdings, LLC (“SBH” or the “Seller”).As reported in the Company’s Form 8-K/A filed with the SEC on January 19, 2018, pursuant to an agreement dated January 3, 2018, the Investors acquired an aggregate of (a) 1,035,767 shares of common stock, $0.001 par value per share, of BHAC (the “Investors’ Common Stock”), and (b) an aggregate of 142,500 warrants to purchase an additional 142,500 shares of Common Stock (collectively, the “Transferred Securities”) and the affiliates of certain of the Investors replaced the former board of directors of BHAC.
Under the terms of the LOI, the Seller has agreed in principle to sell to Holdings 100% of the capital stock of PGHC Holdings, Inc., a Delaware corporation (the “Company”). The Company is a holding company that owns 100% of the capital stock of Papa Gino’s Holding Corp., a Delaware corporation, which together with its direct and indirect subsidiaries, including Papa Gino’s, Inc. (“Papa Gino’s), owns, operates and franchises (i) 148 company owned pizzeria restaurants and one venue licensee, under the trade name Papa Gino’s™ and (ii) 93 company owned sandwich restaurants, 31 franchised locations and three venue licensees under the trade name, D’Angelo’s™ ; in each case, throughout New England (collectively, the “Business”).
The Investors formed Holdings for the sole purpose of consummating the acquisition of the Company and its direct and indirect subsidiaries.
The contemplated acquisition of the Company’s capital stock (the “Company Shares”) is intended to occur in two separate closings.
At the first closing, contemplated to occur on or before April 30, 2018 (the “First Closing Date”), Holdings shall pay to the Seller the sum of $17.5 million in cash, less the sum of: (i) $1.0 million, representing a contract deposit to be paid by Holdings simultaneous with the execution of the Agreement (the “Contract Deposit”), and (ii) the amount of the Company’s transaction expenses, including existing contractually required employee sale/retention bonuses and legal and other professional fees and expenses, which will be paid directly by Holdings (the “Cash Payment”).
The second closing shall occur on a date (the “Second Closing Date”) which shall be not later than 90 days following receipt of the audited consolidated financial statements of the Company, Papa Gino’s and its direct and indirect subsidiaries (collectively, the “Company Group”) for the two fiscal years ended February 2017 and the ten months ending December 31, 2017. At the second closing, BHAC shall acquire from Holdings 100% of the Company Shares. As an additional payment of the Purchase Price, BHAC shall issue to the senior secured lenders for the Seller a total of 500,000 shares of the Common Stock of BHAC, having an indicative value of $10.82 per share (the “BHAC Shares”). In the event that, for any reason (other than the inability to audit the Company Group’s financial statements for the year ended February 25, 2018), BHAC shall not issue the BHAC Shares, then and in such event Holdings shall be obligated to pay in cash an additional $5,410,000.
The Citizen expects to report on further developments, both with the companies and the real estate at 310 and 363 The Great Road.
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