Fat Brands, the restaurant chain operator struggling with cash flow and debt problems that could force it into bankruptcy, now has another problem: Last week it received three delisting notices from the Nasdaq Stock Exchange.
The Beverly Hills, California-based company said that it received one delisting notice because its stock price has spent too long below $1. Fat Brands stock currently trades below 40 cents per share, after having lost nearly 90% of its value over the past year.
The company also received two additional notices on its market value. Its Class A shares have fallen below the minimum $35 million market value required for listing on the exchange. Another listing notes that the value of its Class B stock has fallen below the $1 million minimum required for exchange listing.
Fat Brands’ market capitalization is about $7 million.
In each of these cases, Fat Brands has until July 7 to regain compliance to maintain its listing. The company’s stock price and valuation needs to get above the minimum levels for 10 consecutive days to regain compliance.
If Fat Brands loses its ability to list its shares on the exchange, the company’s stock will trade over the counter. That makes it more difficult for companies to raise funds because investors have to go through brokers to trade the stock.
(For more on Fat Brands’ debt problems, read here.)
All that said, a delisting is likely a secondary concern for a company that is working to stave off bankruptcy.
Fat Brands in November acknowledged that it was in danger of seeking debt protection after the trustee on its whole business securitization demanded full payment on its debt. The company, which owns Fatburger, Fazoli’s and several other chains, owes $1.4 billion. It did not have enough available funds to make a quarterly payment, which prompted the trustee to call the loan.
The company, which presents to investors at the ICR Conference this week, has said that it is renegotiating with lenders and is working to cut costs. It is also seeking to raise funds through Twin Peaks, the casual-dining chain operator it controls. That company has listed a “going concern” warning among its risk factors in a federal securities filing.
Fat Brands also recently gave big raises and retention bonuses to three top executives to keep them around this year in case the company files for bankruptcy. Two of those executives are sons of CEO Andy Wiederhorn.
Fat Brands has struggled with debt used to buy several restaurant chains for around $900 million in 2020 and 2021. The company’s same-store sales have struggled in recent years. Same-store sales have fallen for eight straight quarters at the company’s chains, collectively.
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