Arizona-based sandwich concept Eegee’s has been acquired out of bankruptcy by senior lender Gladstone Capital Corporation, according to local news reports.
The chain was previously owned by private equity firm 39 North Capital since 2018. Gladstone, which served as the stalking horse bidder, closed on the sale in April after Eegee’s received no other competing bids.
The purchase price consisted of a $20.5 million credit bid, $250,000 in cash, coverage of the costs needed to keep certain contracts and leases going, and assumption of certain liabilities.
The chain emerged from bankruptcy with 25 locations in the Tucson and Phoenix markets, all of which will remain open and operational.
“This is a great day for Eegee’s and its dedicated team, loyal customers, and the local neighborhoods we have proudly served for over 50 years,” Eegee’s CEO Chris Westcott said in a statement. “We have a comprehensive plan and financial backing that will reinvigorate the iconic Eegee’s brand while keeping the best of its history.”
Eegee’s fell into bankruptcy in December after facing major revenue declines post-COVID. While sales kept decreasing, the sandwich chain felt pressures from wages, labor shortages, food costs, and maintenance expenses.
In 2021, Eegee’s entered a $17 million credit agreement with Gladstone Capital, later amending it four times to address financial challenges. However, by late 2024, the debt ballooned to $24 million, and the company defaulted on its loan obligations. This prompted Gladstone to replace the company’s leadership and appoint a sole independent director to oversee restructuring efforts.
Many locations failed to generate sufficient revenue to cover rising operational costs. These underperforming outlets eroded overall profitability, contributing to the company’s liquidity crisis.
Eegee’s was founded in 1971 by Edmund Irving and Robert Greenberg.
Gladstone Capital also has investments in Cafe Zupas and Wings ‘N More. Founded in 2001, the firm has invested over $2.5 billion in 260-plus deals across several industries and through a variety of economic cycles, according to its website.
“We will continue investing in what truly matters – our customers and the communities that Eegee’s has served for over 50 years,” Westcott added. “We are also investing in several of our locations to create more inviting and enjoyable spaces.”
