FAT Brands Completes Spin-Off of Twin Hospitality Shares

BEVERLY HILLS, CA – FAT Brands Inc. (FAT), a global franchising company specializing in the retail eating places sector with a market capitalization of $66 million and significant revenue growth of 42% in the last twelve months, has finalized the spin-off of Twin Hospitality Group Inc., according to a recent SEC filing. According to InvestingPro analysis, the company currently appears overvalued based on its Fair Value assessment. On Monday, FAT Brands distributed approximately 5.0% of the fully-diluted shares of Twin Hospitality’s Class A Common Stock to FAT Brands’ shareholders on record as of January 27, 2025.

The distribution resulted in FAT Brands stockholders receiving 0.1520207 shares of Twin Hospitality for each share of FAT Brands they held. With this move, Twin Hospitality has now become an independent, publicly traded entity on the Nasdaq Global Market under the ticker symbol "TWNP."

In preparation for the spin-off, FAT Brands and Twin Hospitality entered into a Master Separation and Distribution Agreement and a Tax Matters Agreement on January 24, 2025. These agreements outline the post-spin-off relationship between the two companies. InvestingPro data reveals that FAT Brands operates with a substantial debt burden, with total debt reaching $1.5 billion and a concerning current ratio of 0.3, indicating potential liquidity challenges. For deeper insights into FAT Brands’ financial health and detailed analysis, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

The Master Separation Agreement facilitated the exchange of FAT Brands’ founder shares in Twin Hospitality for Class A and Class B Common Stock. Additionally, FAT Brands retained certain registration rights for these shares, allowing for their future sale under the Securities Act of 1933.

FAT Brands also secured an Anti-Dilution Option, which permits the company to maintain at least an 80.1% ownership stake in Twin Hospitality, should the latter issue new shares. Furthermore, the agreement includes indemnities for liabilities related to the respective businesses and provisions for the sharing of financial information necessary for FAT Brands’ financial reporting.

The Tax Matters Agreement governs tax liabilities and obligations between the companies. It ensures that Twin Hospitality will be included in FAT Brands’ consolidated tax filings as long as FAT Brands maintains at least 80% ownership. The agreement also outlines the handling of tax proceedings and potential additional distributions of Twin Hospitality’s shares by FAT Brands.

The information in this article is based on the SEC filing by FAT Brands Inc. The details of the agreements, including the Master Separation Agreement and Tax Matters Agreement, are available in the exhibits filed with the SEC. InvestingPro subscribers have access to 12 additional key insights about FAT Brands, including detailed financial metrics, analyst forecasts, and exclusive ProTips that provide crucial context for understanding the company’s strategic moves and financial position.

In other recent news, Twin Hospitality Group Inc. has officially spun off from FAT Brands Inc., now operating independently. The transaction was structured as a pro rata dividend distribution to FAT Brands’ shareholders, who received approximately 5% of Twin Hospitality Group’s Class A Common Stock. In parallel, FAT Brands Inc. declared a monthly cash dividend of $0.171875 per share for its Series B Cumulative Preferred Stock, despite managing a significant debt burden.

On the other hand, FAT Brands Inc. disclosed tax details concerning its 2024 dividends and adjustments to its Warrant exercise prices. All dividends paid on its Class A and Class B Common Stock were classified as a return of capital. The company also adjusted the exercise price of its Warrants to purchase Class A Common Stock from $5.00 per share to $2.2142 per share.

Additionally, FAT Brands Inc. successfully amended its corporate charter and elected its board of directors. The company’s stockholders approved an amendment to the Certificate of Incorporation, allowing for the exculpation of its officers in accordance with Delaware General Corporation Law. These developments, along with the company’s financial activities and strategies, are detailed in the latest SEC 8-K filings by FAT Brands Inc.

In terms of expansion, FAT Brands plans to open 40 new units in Q4 2024, with approximately 1,000 new units in the pipeline, potentially adding $50 million to $60 million in annual adjusted EBITDA. However, the company faced challenges with Smokey Bones and Fazoli’s, both of which reported sales declines. To address this, FAT Brands plans to re-franchise Fazoli’s and convert 30 Smokey Bones locations to Twin Peaks. These are some of the recent developments for FAT Brands Inc. and Twin Hospitality Group Inc.

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