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Fat Brands Inc. (NASDAQ:FAT), currently valued at $36.8 million in market capitalization, reported Thursday that it has entered into a settlement agreement to resolve two derivative lawsuits brought by stockholders in the Delaware Court of Chancery. According to InvestingPro data, the company operates with a significant debt burden of $1.58 billion and faces liquidity challenges with a current ratio of 0.21. The legal actions, filed in June 2021 and March 2022, related to the company’s December 2020 merger with Fog Cutter Capital Group and its June 2021 recapitalization.
Under the terms of the settlement, Fat Brands and certain current and former directors and officers have agreed to adopt specific corporate governance modifications. The settlement does not attribute any liability or wrongdoing to the company or the individual defendants.
As part of the agreement, the company’s insurers will pay Fat Brands $10 million, from which plaintiffs’ counsel fees and expenses will be deducted. In addition, Fog Cutter Holdings LLC will contribute 200,000 shares of Twin Hospitality Group Inc. to Fat Brands.
The settlement remains subject to approval by the Delaware Court of Chancery. If approved, all claims in the derivative actions will be dismissed.
Fat Brands’ securities, including Class A Common Stock (NASDAQ:FAT), Class B Common Stock (NASDAQ:FATBB), and Series B Cumulative Preferred Stock (NASDAQ:FATBP), are listed on The Nasdaq Stock Market LLC.
This information is based on a statement included in the company’s recent SEC filing.
In other recent news, FAT Brands Inc. announced a proposed settlement of derivative lawsuits brought by shareholders, which includes a $10 million cash payment to the company and the surrender of 200,000 shares of Twin Hospitality Group, Inc. Class A Common stock. Additionally, FAT Brands has engaged advisers for restructuring discussions with bondholders, enlisting law firm Latham & Watkins, while bondholders have retained White & Case and Houlihan Lokey as their legal and financial advisers, respectively. In leadership developments, Andrew Wiederhorn has been reappointed as President and Chief Executive Officer of FAT Brands, a role he previously held from the company’s inception until May 2023. Following this appointment, Ken Kuick and Taylor Wiederhorn will continue in their roles as Chief Financial Officer and Chief Development Officer, respectively. Moreover, Andrew Wiederhorn has also been appointed as Chairman of the Board of Twin Hospitality Group Inc., following his instrumental role in the strategic spin-out of the company earlier this year. These changes reflect ongoing strategic and leadership shifts within both FAT Brands and Twin Hospitality Group.
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