FAT Brands is one step closer to spinning off Twin Peaks and Smokey Bones and taking them public as a combined entity with the filing of a form Form 10 Registration Statement with the U.S. Securities and Exchange Commission for the newly named Twin Hospitality Group.
According to the Form 10, the Beverly Hills, Calif.-based company plans to spin off 5% of Twin Hospitality Group’s class A common stock to shareholders as the company is listed on Nasdaq as an independently owned private company. The remaining 95% of stock will continue to be held by FAT Brands. This is lower than the average IPO, which tends to spin off about 20% of the company to public shareholders and means that FAT Brands will retain a significant controlling interest in Twin Peaks and Smokey Bones after it goes public.
"The filing of the Form 10 Registration Statement is an important milestone in unlocking value and growth opportunities for Twin Hospitality Group and the Twin Peaks brand, while continuing to generate long-term value for FAT Brands shareholders," Ken Kuick, co-CEO of FAT Brands, said in a statement. “We look forward to completing the separation later this year, realizing significant benefits for both companies."
According to the SEC form, Twin Hospitality’s class A shares will be worth $0.0001 per each and will be distributed to the FAT Brands shareholders on a proportional basis. Shareholders will have the opportunity to invest in either or both now-separate companies.
“Establishing our company as separate from FAT Brands will provide us with a greater ability to focus on and grow our business,” Twin Hospitality said in the registration statement. “By separating the businesses, we will have the flexibility to implement strategic initiatives aligned with our business plan and to prioritize investment spending and capital allocation in a manner that will lead to growth and increased operational efficiencies of our company that otherwise may not occur as part of a larger, more diversified enterprise like FAT Brands.”
The registration statement also notes that FAT Brands entered into a promissory note in 2022 with Sun Barbecue LLC to refinance the company’s existing debt and repay an outstanding line of credit worth about $19.3 million. The fine print of the form warns investors that Twin Hospitality cannot guarantee that the business “will generate cash flow from operations” or that “other capital will be available” to meet the aforementioned payment obligations. If that is the case, then the company may choose to refinance or restructure its debt, sell assets, or seek to raise more capital.
This potential transaction is still subject to multiple external conditions, including the effectiveness and approval of the Form 10 Statement, final approval of the Nasdaq listing, and completion of the refinancing transaction.
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