Operations

FAT Brands merging with controlling stakeholder

Provided

December 11, 2020

FAT Brands Inc., the parent company of Fatburger, Johnny Rockets and several other brands, is merging with Fog Cutter Capital Group Inc., FAT's controlling stockholder.

"We have taken a number of steps in 2020 to bolster our balance sheet and ensure that FAT Brands is as nimble and opportunistic as possible, especially in this environment," FAT Brands CEO Andy Wiederhorn said in a company press release. "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 $100 million of net operating loss carryforwards, 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 internalized at FAT Brands, and we will now have much greater flexibility and optionality in our capital structure," Wiederhorn said.

Wiederhorn said with the recent acquisition of Johnny Rockets and in a post-COVID environment, he expects the company to generate twice as much as its 2019 EBITDA of $7.7 million.

In connection with the Fog Cutter combination, FAT Brands has declared a special stock dividend payable only to holders of its common stock other than Fog Cutter, consisting of 0.2319998077 shares of FAT Brands' 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 shares recently traded at $9.50, up 54%.

FAT Brands, which owns Fatburger, Johnny Rockets, Buffalo's Cafe, Buffalo's Express, Hurricane Grill & Wings, Elevation Burger, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, franchises over 675 units worldwide.