New York, January 25 (FinanceEnquiry.com) - Avenue Capital Group will be acquiring troubled Quiznos sandwich chain in a debt-restructuring deal with lenders. Quiznos creditors have approved the deal that will help in keeping the chain away from bankruptcy. As part of the deal, Avenue will be investing $150 million in Quiznos and a part of the debt will be converted to equity. With this investment, more than 70 percent of the chain will be acquired by Avenue. The restructuring will reduce Quiznos’ more than $870 million debt by about $300 million.

Quiznos gathered this debt in a leveraged buyout about five years ago. The current private-equity owners of the chain, CCMP Capital Advisors LLC and Consumer Capital Partners, would find it difficult to recover their investments. Quiznos has been having a tough time because of diminishing sales and a violation of debt terms recently. The chain was left with no other option but to negotiate with lenders in order to reduce debt and raise more capital.

Quiznos also needed to get concessions from landlords, former executives and others apart from getting lenders to restructure the debt owed to them. As per the restructuring, senior lenders, who were owed $650 million, will get $75 million in cash, whereas second-lien lenders, who were owed $225 million, forgave their debt in exchange for a 40 percent stake in Quiznos.