Spicy Pickle Franchising Inc. has been acquired by Cibus Holding LLC, a Denver-based company representing lenders that called in loans totaling $4.75 million after the now 22-unit sandwich chain defaulted, officials said Thursday.
Following an auction held earlier this week, Cibus Franchising LLC, a subsidiary of Cibus Holding, emerged as the new owner of Spicy Pickle, as well as sister brand BG Urban Cafes/Grills, an 11-unit bakery-café concept the company was developing in Canada.
The move takes the once-public company private and clears remaining debt, Cibus officials said.
Last week, six of the company’s seven company-owned locations closed after the Denver-based Spicy Pickle was forced into liquidation because it was unable to meet loan obligations. One company location remains open, as do 20 franchise locations in Colorado and nine other states.
Following the default, lenders Presley and Patricia Stacey Reed, who are also principals behind Cibus Holding, on Feb. 2 demanded immediate payment of $3.8 million in loans, interest and collection costs owed.
Another $969,843 was owed to Raymond and Joan BonAnno, according to filings with the U.S. Securities and Exchange Commission. However, a spokesman for Cibus said the BonAnnos are not involved in the new ownership.
A spokesman for Cibus said the former management team, including chief executive officer Mark Laramie, were no longer with the company.
Cibus, however, said in a statement that a new team had been assembled including Spicy Pickle operations veterans, who were not named.
Chris Bue, the newly appointed director of franchise operations for Spicy Pickle, said in a statement that the new owners plan to continue building both brands.
“Today’s announcement marks an exciting new beginning for Spicy Pickle Sandwich Co. and BG Urban Cafes/Grills,” Bue said. “Taking care of our franchisees is our number one priority, and the strong financial and operational backing of Cibus puts us in a great position to help them thrive.”
Founded in 1999, Spicy Pickle filed for initial public offering in 2006, but since then never turned a profit. Over nearly six years, the company reported $18 million in aggregate revenue and $18.3 million in losses.
For its most recent quarter ended in September, the company reported a net loss of $671,017, compared with a loss of $802,429 a year earlier. Revenue for the quarter totaled $1 million, down from $1.1 million in the third quarter a year ago.
Year-to-date, the company recorded a loss of $2.6 million, compared with a year-ago loss of $1.8 million.