FAT Brands Inc. announced that it has completed an offering of $40 million of Series 2020-1 Fixed Rate Asset-Backed Notes. The offering has been structured as a whole business securitization transaction through the creation of FAT Brands Royalty I, LLC. The Notes were priced with a weighted average fixed interest rate of 7.75% per annum.

The Notes, rated by DBRS Morningstar, were issued in two tranches including senior tranche, A-2, and senior subordinated tranche, B-2, as detailed below.

Andy Wiederhorn, president and CEO of FAT Brands, says, “We are happy to announce the completion of our whole business securitization transaction, which demonstrates the confidence that the institutional investor community has in our platform.  This transaction will significantly lower FAT Brands’ marginal cost of capital to 7.75% and our weighted average cost of capital to 8.49%; our net interest expense will meaningfully decrease by nearly $2 million per year.  In addition, this structure includes an accordion feature, which will support FAT Brands’ acquisition growth strategy.  We could not be more excited about this next phase of our growth.”

The company intends to use the proceeds from the Notes to repay existing indebtedness under its term debt; pay the transaction costs and fund the reserve accounts associated with the securitized financing facility; and for potential acquisitions, working capital and general corporate purposes, and the repayment of other indebtedness.

Cadence Group, Inc., a leading fintech securitization platform, was the structuring consultant of this transaction.  Legal advisors to this transaction were Loeb & Loeb LLP and Foley & Lardner LLP for FAT Brands, and Manatt, Phelps & Phillips, LLP for Cadence Group, Inc.