FAT Brands surges on plan to merge with controlling shareholder Fog Cutter Capital

Dec. 11, 2020 6:24 AM ETFAT Brands Inc. (FAT), FATBP, FCCGBy: Niloofer Shaikh, SA News Editor18 Comments
  • FAT Brands (NASDAQ:FAT) to combine with Fog Cutter Capital Group (OTCPK:FCCG), the company’s controlling stockholder. Shares are up 94% premarket.
  • The merger will aid FAT Brands with increased financial flexibility and simplified corporate structure. Fog Cutter holds more than $100M of NOLs - with the merger, they can be internalized and used at FAT Brands.
  • In connection with the merger, The company 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 (NASDAQ:FATBP) for each outstanding share of common stock held by such stockholders, with the value of any fractional shares to be paid in cash. Payable on December 23 with a record date of December 21.
  • Andy Wiederhorn, President and CEO of FAT Brands, stated “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. 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 (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 internalized at FAT Brands, and we will now have much greater flexibility and optionality in our capital structure.”
  • With the acquisition of Johnny Rockets, in a post-COVID environment, the company expects to generate 2x 2019 EBITDA of $7.7M.

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