Mickelson bids on Nashville Waffle House franchise

Mickelson bids on Nashville Waffle House franchi

Wriiten by: Wendy Lee          

Golfer Phil Mickelson, a two-time Masters winner and top-five finisher at Augusta National this year, is among a trio of businessmen who have made a late bid to buy a Nashville-based Waffle House franchisee out of bankruptcy.

The group's bid competes with an earlier offer from parent company Waffle House of Norcross, Ga., to buy the SouthEast Waffles franchisee out of bankruptcy for nearly $19 million.

Mickelson's group, GS Acquisitions LLC, has offered $20.2 million in cash and payments over time for the 105-restaurant group that spans four states, according to U.S. Bankruptcy Court documents filed late Tuesday.

Gary Murphey, the court-appointed chief restructuring officer for SouthEast Waffles, called the rival bids an exciting development that could "maximize the return to creditors" in the case.

SouthEast Waffles filed for bankruptcy nearly a year ago amid allegations of the company passing $3.7 million in worthless checks between bank accounts and not paying more than $2 million in payroll taxes.

Since then, it has posted a profit of $3 million from September 2008 through June of this year, Murphey said.

GS Acquisitions is run by Terry Pefanis, former chief operating officer of Franklin-based Big Idea Inc.; Steve Loy, chief executive of Scottsdale, Ariz.-based Gaylord Sports Management, which manages pro sports figures; and Mickelson. Loy is Mickelson's sports agent.

Opportunity seen

GS Acquisitions became interested in buying the SouthEast Waffles franchise because all three men enjoy eating at Waffle House, though none of them has any restaurant experience, Pefanis said. Pefanis said the men saw a good business opportunity based on the restaurant chain's location in the Southeast region and recent profits.

Pefanis said GS Acquisitions would hire an operator with "significant" Waffle House restaurant experience, renovate some of the older Waffle House locations and eventually expand.

"We think in these economic times, they will fare well," Pefanis said. Waffle House "offers an excellent value proposition to the customer for a modest price for (food) with high-quality ingredients," he said.

Creditors may vote

Creditors probably will vote on which bid they prefer at a later date.

Under GS Acquisition's plan, unsecured creditors would receive about 10 percent more than Waffle House's bid on a present-value basis, Murphey said.

A bankruptcy judge would have to approve a transfer of franchise rights to a new buyer.

The Waffle House parent company has the right to oppose such a transfer, said SouthEast Waffles attorney Glenn Rose.

Pefanis said GS Acquisitions approached Waffle House about becoming a franchisee but was turned down last week. He said Waffle House wanted a majority owner that had experience with the chain.

Waffle House spokesman Pat Warner declined to comment other than to say the parent company is reviewing the latest developments.

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