FAT Brands issues preferreds in Twin Peaks acquisition

Chicago, Oct. 6 – FAT Brands Inc. paid its $300 million acquisition price for Twin Peaks with $232.5 million in cash and 2,847,393 shares of the company’s series B cumulative preferred stock, according to an 8-K filing with the Securities and Exchange Commission.

The company has agreed to register the preferred stock consideration for six years.

The seller has agreed to lock-up provisions during an initial period where it can not offer, sell or transfer any interest in the shares.

The lock-up provisions restrict sales until March 31, 2022 for 1,793,858 of the shares and until Sept. 30, 2022 for the remaining 1,053,535 shares, subject to exceptions in the put/call agreement.

Under the put/call agreement, FAT Brands was granted a call right and Twin Peaks was granted a put right at any time before March 31, 2022 for a cash payment of $42.5 million for the first set of shares.

For the second set of 1,053,535 shares, there is a put/call right until Sept. 30, 2022 for $25 million.

If FAT Brands does not pay the amount when due, then it will pay Twin Peaks interest on the amount due at the rate of 10% per year.

Previously reported, FAT Brands’ series B cumulative preferred stock carries an 8.25% dividend and has a liquidation preference of $25 per share.

FAT Brands is a Beverly Hills, Calif.-based restaurant franchising company.

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