Sale Will Enable Increased Focus on Pollo
Tropical Growth Opportunity
Transaction Proceeds to Fully Repay Term Loan
Borrowings
Cash Balance as of June 27, 2021 of $67.6
million
Fiesta Restaurant Group, Inc. ("Fiesta" or the "Company")
(NASDAQ: FRGI) today announced that it has entered into a
definitive stock purchase agreement for the sale of the Taco
Cabana® restaurant brand to YTC Enterprises, LLC, an affiliate of
Yadav Enterprises, Inc. ("Yadav"), a restaurant company that
operates close to 400 locations throughout Northern California,
Texas and sixteen other states.
Taco Cabana Divestiture and Use of Proceeds
The Company’s stock purchase agreement with Yadav provides for
the sale of all of the outstanding capital stock of Taco Cabana,
Inc., the parent company of the Taco Cabana business, for a cash
purchase price of $85 million, subject to reduction for certain
working capital and other closing adjustments estimated in the
aggregate amount of approximately $7 million to $9 million
(excludes Winter Storm Uri insurance proceeds to be received by
Fiesta). The transaction is expected to close in the third quarter
of 2021, subject to the satisfaction of customary closing
conditions. Proceeds from the sale will be used to fully repay
Fiesta’s approximately $74.6 million of outstanding term loan
borrowings under Fiesta’s senior credit facility and to pay
divestiture transaction fees and a loan prepayment premium totaling
approximately $4.6 million(1). As of June 27, 2021, the Company
cash balance was $67.6 million. Subsequent to the transaction
close, a portion of those funds will be used for investments to
accelerate Pollo Tropical's ® growth. In addition, the Company’s
Board of Directors will be evaluating additional strategies for
increasing shareholder value including potential future stock
repurchases.
Fiesta President and Chief Executive Officer Richard Stockinger
stated, “We made the strategic decision to sell the Taco Cabana
business to allow our leadership team to focus completely on
accelerating Pollo growth, and we are very excited about the
tremendous growth opportunities we have for the Pollo Tropical
business.”
Richard Stockinger added, “Anil Yadav, the CEO of Yadav
Enterprises, has an impressive entrepreneurial background and is a
highly-respected restaurant operator with a proven record of
success across a variety of limited and full-service concepts. We
are confident he will be an effective steward of the Taco Cabana
brand for the long-term.”
Driving Growth of Pollo Tropical
Stockinger concluded, “We believe the Taco Cabana sale will
provide great value to our shareholders, allowing us to create a
more effective, efficient and focused organization, applying
appropriate resources to accelerate delivery of the exciting growth
potential we have in our Pollo Tropical brand. This will include
our continued efforts to drive an upgraded customer experience
across all service channels, continuing to invest in expanding our
growing digital platform and finalizing our new unit expansion
plans targeted for 2022.”
- Amount comprised of a loan prepayment fee of 3% of the
principal repaid of $2.2 million and divestiture transaction fees
estimated at approximately $2.4 million. As part of the
transaction, unamortized debt issuance costs from the existing
senior credit facility of $3.5 million will also be recorded as an
expense.
About Fiesta Restaurant Group, Inc.
Fiesta Restaurant Group, Inc., owns, operates and franchises the
Pollo Tropical® and Taco Cabana® restaurant brands. The brands
specialize in the operation of fast casual/quick service
restaurants that offer distinct and unique flavors with broad
appeal at a compelling value. The brands feature fresh-made
cooking, drive-thru service and catering. For more information
about Fiesta Restaurant Group, Inc., visit the corporate website at
www.frgi.com.
For the year ended January 3, 2021, Taco Cabana generated total
revenues of $239.4 million and Adjusted EBITDA of $8.5 million. As
of July 1, 2021, there were 142 company-owned and operated Taco
Cabana restaurants located in Texas and six franchised Taco Cabana
restaurants located in New Mexico.
About Yadav Enterprises, Inc.
Yadav Enterprises, Inc. is a restaurant company operating close
to 400 locations throughout Northern California, Texas and sixteen
other states. Yadav is the largest Jack in the Box® franchisee, one
of the largest Denny’s® franchisees, the largest TGI Friday’s®
franchisee and a significant investor in the ownership group of TGI
Friday’s® global parent company, and a franchisee of El Pollo Loco®
and Corner Bakery Cafe®.
Forward Looking Statements
Certain statements contained in this news release and in our
public disclosures, whether written, oral or otherwise made,
relating to future events or future performance, including any
discussion, express or implied regarding our use of proceeds from
the sale, anticipated Pollo Tropical growth, plans, objectives and
the impact of our initiatives, and our investments in strategic
initiatives for Pollo Tropical, such as improved customer
experience initiatives, investments in our digital and related
platforms and new unit expansion, contain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These statements are often identified by the
words "may," "might," "believes," "thinks," "anticipates," "plans,"
"positioned," "target," "continue," "expects," "look to," "intends"
and other similar expressions, whether in the negative or the
affirmative, that are not statements of historical fact. These
forward-looking statements are not guarantees of future performance
and involve certain risks, uncertainties, and assumptions that are
difficult to predict, and you should not place undue reliance on
our forward-looking statements. Our actual results and timing of
certain events could differ materially from those anticipated in
these forward-looking statements as a result of certain factors,
including, but not limited to, those discussed from time to time in
our reports filed with the Securities and Exchange Commission,
including our Annual Report on Form 10-K and our quarterly reports
on Form 10-Q. All forward-looking statements and the internal
projections and beliefs upon which we base our expectations
included in this release are made only as of the date of this
release and may change. While we may elect to update
forward-looking statements at some point in the future, we
expressly disclaim any obligation to update any forward-looking
statements, whether as a result of new information, future events,
or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20210701005279/en/
Media: Aaron Palash 212-355-4449
Fiestagroup-JF@joelefrank.com
Investor Relations: Raphael Gross 203-682-8253
investors@frgi.com
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