STK parent buys brand for $25M in cash, $11M debt in bankruptcy court deal
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One Group Hospitality Inc. and its affiliates have completed the bankruptcy court purchase of Kona Grill Inc., the company said Monday.
The One Group, parent to the STK steakhouse concept, acquired 24 Kona Grill domestic restaurants and franchise rights for one international location in Dubai, for $25 million in cash and assumed of working capital liabilities of about $11 million.
Scottsdale, Ariz.-based Kona Grill casual-dining chain filed for bankruptcy protection April 30 in U.S. Bankruptcy Court for the Delaware District, citing assets of $53.6 million and debts of $74 million.
One Group said the acquisition is expected to add $100 million in annual revenue. The company forecast $23 million to $25 million in consolidated adjusted earnings before interest, taxes, depreciation and amortization in 2020.
“Over the next 12 months, we intend to integrate Kona Grill by leveraging our corporate infrastructure, our bar-business knowledge and unique VIBE dining program, to elevate the brand experience and drive improved top line performance to create long-term shareholder value,” said Emanuel “Manny” Hilario, One Group president and CEO, in a statement.
One Group updated its 2019 targets for the balance of the fiscal year, forecasting total food and beverage sales at all owned and managed units of between $213 million to $223 million, up from $190 million and $200 million.
One Group said the acquisition was funded with cash on hand and proceeds from a new senior secured credit facility, which consists of a $48 million senior secured term loan and a $12 million revolving credit line from Goldman Sachs Specialty Lending Group L.P.
One Group Hospitality is scheduled to release its third quarter financial results on Nov. 7 after the market closes.
The company’s primary restaurant brand is the 19-unit STK concept. Its food and beverage hospitality services division develops and manages operations in high-end hotels and casinos.
Correction Oct. 8, 2019: This story has been edited to clarify consilidated adjusted earnings projections.
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