Tully’s Enters Asset Purchase Agreement With Kachi Partners

TC Global Inc., the parent company for Tully’s, a specialty coffee retailer based in Seattle, has entered into a “stalking horse” asset purchase agreement (APA) with Kachi Partners, an entrepreneurial finance group. 

Tully’s submitted the APA to the Bankruptcy Court on Nov. 26 and intends to conduct a court-supervised auction of its business under Section 363 of the U.S. Bankruptcy Code later this year.

“With this agreement in place with Kachi, we believe the business is positioned to emerge from this process in early 2013 and that we will be a much stronger company as a result,” said Scott Pearson, president and CEO of TC Global.

Tully’s filed for protection under Chapter 11 of the U.S. Bankruptcy Code in October, and closed 19 unprofitable locations. Since the filing and store closures, same-store sales have increased and profitability has improved. The company has also continued its focus on reducing costs through management realignment and consolidation of overhead at all levels of the organization. 

“We are proud of what the Tully’s team has accomplished since we filed Chapter 11,” said Pearson. “Our team has continued to deliver the highest-quality and best-tasting coffee, in a warm and comfortable environment, with outstanding customer service.”

The company currently operates 47 company-owned stores in Washington and California, and continues its partnerships with franchisees and grocery chains throughout the Western United States and Asia. Neither the bankruptcy nor the APA affect the wholesale and online Tully’s Coffee® business and brand, which were purchased by Green Mountain Coffee Roasters Inc. (GMCR) in 2009. TC Global intends to continue sourcing coffee for its retail stores under its existing supply and licensing agreements with GMCR.

Through company-owned, -licensed and -franchised specialty locations in Washington, Oregon, California, Arizona, Idaho, Montana, Colorado; throughout Asia with Tully’s Coffee International; and with its global alliance partner Tully’s Coffee Japan, Tully’s premium coffees are available at more than 500 branded retail locations globally, including 119 locations in the United States.