Exciting Developments in FAT Brands' Financing Strategy

FAT Brands Enhances Fazoli’s Securitization for Greater Flexibility

FAT Brands Inc. (NASDAQ: FAT), a renowned global player in the franchise sector, has taken significant strides towards optimizing its financial structure. The company operates a variety of popular restaurant concepts, including Fazoli's and Native Grill & Wings, and has recently announced amendments to its securitization credit facility that will strengthen its operational framework.

Key Features of the Amendments

These amendments to the Fazoli’s Securitization include several noteworthy features aimed at providing improved terms and enhanced operational capabilities.

Extended Repayment and Call Dates

First, the repayment date for the Class A-2 Notes has been extended from January 2025 to July 2026. This extension is crucial as it provides FAT Brands more time to manage its liabilities effectively. Should the Class A-2 Notes remain unpaid or refinanced by the new Anticipated Repayment Date, an additional interest rate of 2.5% per annum will start to accrue, ensuring a fair approach for all parties involved.

Flexible Financing Conditions

Secondly, the Anticipated Call Date for all notes under the Fazoli’s Securitization has similarly been pushed back from July 2023 to October 2025. This change will allow FAT Brands the opportunity to prepare adequately for repayment, and if necessary, defer incurred interest rates to offer extra time for planning and strategy implementation.

Relaxed Financial Covenants

Furthermore, various financial covenants directly linked to debt service coverage ratios have also been adjusted. These relaxations significantly alleviate pressure regarding potential “Rapid Amortization Events” or “Cash Flow Sweeping Events” that could destabilize operations. By deferring deadlines to 2026, FAT Brands can focus on growth without immediately triggering punitive measures.

Opportunities for Refranchising

Additionally, the bond indenture has been revised to allow FAT Brands to sell certain company-owned restaurants to franchisees. This strategical shift enables the company to initiate a refranchising process for its corporate-owned Fazoli’s locations, thereby streamlining operations while increasing brand presence through franchising.

Company Statement

Andy Wiederhorn, the Chairman of FAT Brands, expressed confidence in the positive impact of these amendments, stating, "We are pleased to announce the successful amendment of the Fazoli’s credit facility, which enhances our financial flexibility. The amendments provide us with extended dates for repayment, relaxed covenants, and the ability to refranchise our restaurants. This reflects the solid relationship we maintain with our lenders and their confidence in our business strategy."

A Look at FAT Brands

FAT Brands (NASDAQ: FAT) is not just another franchising company. It stands out by strategically acquiring and managing diverse dining concepts, ranging from fast casual to polished dining experiences. Currently, the company boasts an impressive portfolio of 18 unique brands, such as Round Table Pizza, Fatburger, Marble Slab Creamery, and others, totaling over 2,300 units globally. This robust growth strategy demonstrates the company's commitment to expanding its foothold in the food service industry.

Concluding Thoughts

FAT Brands is navigating through a transformative phase that positions it for further growth and prosperity. With these adjustments to the Fazoli’s Securitization, the company is not only enhancing its financial structure but is also setting the stage for strategic developments in the future. The commitment to refranchising indicates a forward-thinking approach that may set the groundwork for increased market presence and new opportunities. As FAT Brands continues to evolve, it is a company to watch in the burgeoning landscape of the restaurant industry.

Frequently Asked Questions

What changes were made to the Fazoli’s Securitization?

The key amendments include extensions on repayment and call dates, relaxed financial covenants, and permitting the refranchising of corporate restaurants.

How has FAT Brands' financial flexibility improved?

By extending deadlines for repayment, relaxing covenants, and allowing sales of corporate restaurants to franchisees, FAT Brands has enhanced its financial structure.

What is the significance of refranchising for FAT Brands?

Refranchising allows FAT Brands to streamline operations and expand its footprint by transforming corporate-owned locations into franchisee-operated units.

Which restaurant brands does FAT Brands operate?

FAT Brands operates several well-known restaurant concepts including Round Table Pizza, Fatburger, Johnny Rockets, and Fazoli's.

Who is the Chairman of FAT Brands?

Andy Wiederhorn serves as the Chairman of FAT Brands, emphasizing the company's growth strategies and financial improvements.

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