Fat Brands, Inc. Registers $30 million Preferred to Pay Off Sardar Biglari


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Fat Brands, Inc. (FAT-NASDAQ CM), the restaurant franchisor of Fatburger, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Yalla Mediterranean, the Ponderosa and Bonanza Steakhouses, and the recently acquired Elevation Burger, has registered a “best efforts” offering of up to $30 million of preferred stock and warrants.

The proceeds from the sale will be used to pay off an outstanding loan in the amount of $23.5 million to The Lion Fund, L.P. and The Lion Fund II, L.P.  Biglari Capital Corp., solely owned by Biglari Holdings (BH-NYSE) CEO Sardar Biglari, is the general partner of The Lion Fund, L.P. and The Lion Fund II, L.P.

Fat Brands initially borrowed $20 million from the Lion Funds in January to repay a $16 million loan to another lender.  The company then increased its borrowings to the Lion Funds by $3.5 million in order to fund a note in connection with the company’s acquisition of Elevation Burger on June 19. The Lion Fund loans accrue interest at the rate of 20% per annum and are due on June 30, 2020.

In the current offering, filed with the Securities and Exchange Commission on July 12, Fat Bands is offering 1,200,000 shares of 8.25% Series B Cumulative Preferred Stock and 720,000 of warrants on a best efforts basis. The company intends to pay dividends on the preferred stock from and including the date of original issuance in the amount of $2.0625 per share each year, which is equivalent to 8.25% of the $25.00 liquidation preference per share. Tripoint Global Equities, LLC, and its online division, Banq®, and Digital Offering LLC are the selling agents.

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