LOS ANGELES — FAT (Fresh. Authentic. Tasty.) Brands Inc. has entered into an agreement to combine with Fog Cutter Capital Group Inc. (FCCG), the company’s controlling stockholder.
The merger is intended to provide FAT Brands with increased financial flexibility and simplified corporate structure at a time in the restaurant industry when committed capital and first-mover advantage are critical to strategic acquisitions.
“We have taken a number of steps in 2020 to bolster our balance sheet and ensure FAT Brands is as nimble and opportunistic as possible, especially in this environment,” says Andy Wiederhorn, president and CEO of FAT Brands. “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 per cent 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.”
FAT Brands currently owns nine restaurant brands — Fatburger, Johnny Rockets, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Elevation Burger, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses — and franchises more than 675 units worldwide.