Restaurant franchising company FAT Brands has agreed to merge with its controlling stakeholder Fog Cutter Capital Group (FCCG).
Financial terms of the deal have not been shared.
Responsible for running concepts such as Fatburger and Buffalo’s Express, FAT Brands expects the merger to provide it with improved financial flexibility and a simplified corporate structure.
Commenting on the merger, FAT Brands president and CEO Andy Wiederhorn said: “As we have disclosed in the past, FAT Brands has considered a combination with Fog Cutter as another step in our efforts to simplify our corporate structure and eliminate limitations that restrict our ability to use common stock for accretive acquisitions and capital raising.”
“FCCG holds more than $100m of net operating loss carryforwards (NOLs), which could only be made available to FAT Brands as long as FCCG owned at least 80% of FAT Brands. With this combination, the NOLs will be internalised at FAT Brands, and we will now have much greater flexibility and optionality in our capital structure.”
As part of the merger, FAT Brands has declared a special stock dividend payable only to holders of its common stock except for FCCG.
This consists of 0.2319998077 shares of the company’s 8.25% Series B Cumulative Preferred Stock for each outstanding share of common stock held by such stockholders, with the value of any fractional shares to be paid in cash.
FAT Brands, which acquired restaurant chain Johnny Rockets in September, said that it intends to capitalise on organic and acquisition-led growth in the future.
Wiederhorn added: “With the acquisition of Johnny Rockets, in a post-Covid environment, we continue to anticipate that the company can double our 2019 EBITDA of $7.7m.”
FAT Brands also operates Buffalo’s Cafe, Hurricane Grill & Wings, Elevation Burger, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses.