DENVER — Quiznos has reached an agreement with most of its first- and second-lien lenders on a consensual financial restructuring plan that will reduce the company's current debt substantially and provide $150 million of new equity capital to help position it for future growth. The company planned to immediately start soliciting approval of the proposed transaction.

The company has entered into a restructuring support agreement with parties representing approximately 75.1 percent of its first-lien loans and 72.8 percent of its second-lien loans. The transaction provides for the restructuring of these loans and all of the equity interests in the company through either an out-of-court exchange offer or a prepackaged plan of reorganization under Chapter 11 of the United States Bankruptcy Code.

Under the proposed transaction, Avenue Capital, an investment firm currently holding a significant amount of the company's first- and second-lien debt, will become the majority owner of the company through a $150 million equity infusion and the conversion of debt to equity. Avenue's equity funding will be used to reinvest in the business and retire a portion of the Quiznos first-lien debt.

The company expects to operate on a business as usual basis during this process and it will honor all current vendor obligations while the company pursues its out-of-court restructuring process, according to the company.

"We are pleased to have reached this agreement, which will strengthen our balance sheet and allow us to strengthen our brand and customer experience," said Greg MacDonald, Quiznos chief executive officer. "This recapitalization will provide a path to eliminate nearly $300 million, or nearly one-third, of our current debt load and provide $75 million of new funding to help support our business initiatives and pay fees.”