Hostmore Plc,, the United Kingdom-based franchisee of casual-dining TGI Fridays, said its planned reverse takeover of the Dallas-based franchisor was off, and shares of the company fell more than 91% Monday.
Hostmore said it expects to be delisted on the U.K. stock exchange after telling shareholders that the Fridays buyout wouldn’t proceed after the franchisor lost control over many of its assets.
Hostmore, which owned and operated 87 restaurants, also said its planned sale of corporate stores generated bids that indicate consideration will be less than the borrowings. As such, Hostmore said it didn’t expect to “recover any meaningful value for its ownership.”
Hostmore and TGI Fridays agreed in April to merge the 87-unit United Kingdom-based franchisee with the Dallas-based Fridays parent company. Hostmore was Fridays largest global franchisee. Terms of the all-share merger were reported to be about $220 million U.S.
The deal had been scheduled to close in the third quarter.
However, Fridays was removed as manager of TGIF Funding, which owns the rights to collect restaurant royalties and that was moved to a bondholder-approved party, FTI Consulting, according to the Financial Times.
TGI Fridays assets have served as collateral for asset-backed securities it sold in 2017, Reuters and Bloomberg reported, and it lost control of them last week after it failed to provide bondholders with required documents on time.
Hostmore, which went public on the London markets in 2021, “is also dealing with mounting debts and loss-making TGI Fridays outlets it owns, which last year resulted in management changes, deep cost cuts and made it halt new store openings until 2025,” Reuters reported.
TGI Fridays will continue U.K. operations under new ownership, Hostmore said.
Technomic’s Ignite data for 2023 ranked TGI Fridays’s sales at No. 79 among U.S. chain restaurants with an estimated $702 million in sales at 233 units.
Hostmore was established in 2021 and had developed a quick-service version of TGI Fridays called Fridays and Go.
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