SYRACUSE, N.Y.--(BUSINESS WIRE)--May 1, 2019--
Carrols Restaurant Group, Inc. ("Carrols" or the “Company”) (Nasdaq:
TAST) announced that on April 30, 2019 it completed the acquisition of
165 Burger King® and 55 Popeyes® restaurants from
Cambridge Franchise Holdings, LLC (“Cambridge”) in 10 Southern and
Southeastern states. Carrols, which operates 1,010 Burger King®
and 55 Popeyes® restaurants in 23 states following the
acquisition, is the largest franchisee of Restaurant Brands
International, Inc. (the franchisor of Burger King®, Popeyes®
and Tim Hortons®).
As previously announced, Carrols has also entered into an Area
Development and Remodeling Agreement with Burger King Corporation
(“BKC”) that pre-approves the Company for continued growth through both
acquisitions and new restaurant development. Under the terms of the
agreement, Carrols’ right of first refusal (“ROFR”) assigned to it by
BKC has been expanded to allow for the acquisition of 500 additional
Burger King® restaurants. Carrols has also assumed
Cambridge’s existing Popeyes® Development Agreement and its
ROFR for Popeyes® restaurant acquisitions in Tennessee and
Kentucky. As part of these agreements, Carrols has agreed to develop 200
new Burger King® and 70 Popeyes® restaurants over
the next six years, and to remodel or upgrade a number of its Burger King®
restaurants (or restaurants to be acquired) to the Burger King of
Tomorrow image over the same period. Carrols believes these development
agreements provide it with a significant expansion runway for both
brands.
Dan Accordino, Chairman and CEO of Carrols, commented, “This transaction
is an exciting growth catalyst for Carrols. We believe it strengthens
our position in the Burger King system by providing us the opportunity
to continue executing our acquisition and expansion strategy, and adds
Popeyes®, a growing brand that further enhances our expansion
alternatives. We also believe that we have the potential to improve the
performance of the Cambridge restaurants and to leverage their footprint
and development team as we launch the next phase of growth for the
benefit of Carrols’ shareholders.”
Concurrent with the transaction, Carrols refinanced all of Carrols and
Cambridge’s indebtedness and entered into a $550 million secured senior
credit facility which includes a $425 million Term Loan B facility due
2026 that bears interest at LIBOR + 3.25% and was issued at an OID of
99.5. Use of proceeds included (i) refinancing Carrols’ existing 8%
notes, (ii) paying off Cambridge’s indebtedness, and (iii) paying
certain fees and expenses related to the financing and the Cambridge
transaction. The secured senior credit facility also included a $125
million, undrawn five-year revolving credit facility that will be used
to execute Carrols’ growth initiatives as needed.
Total consideration to Cambridge included (i) approximately 7.36 million
shares of Carrols common stock (a 16.6% equity interest) and (ii) shares
of 9% PIK Series C Convertible Preferred Stock that will be convertible
into approximately 7.45 million shares of Carrols common stock. The
conversion of the preferred stock will be subject to a vote of Carrols’
stockholders to occur at the Company’s 2019 Annual Meeting of
Stockholders and will automatically convert into common stock upon
stockholder approval of such conversion. All shares issued to Cambridge
are subject to a two-year restriction on sale or transfer subject to
certain limited exceptions. On a fully-diluted, as-if converted basis
after giving effect to both the conversion of the Cambridge and BKC
convertible preferred stocks to common stock, Cambridge would hold an
approximate 24% equity interest in the Company. There was no cash
consideration as part of the transaction. In conjunction with the
merger, Alex Sloane and Matt Perelman, the Co-Founders of Cambridge,
have joined the Carrols Board of Directors.
“Matt and I are excited to join the Carrols Board and support the next
phase of the Company’s growth. We believe that Carrols’ strong
management team, efficient financing structure, partnership with RBI and
compelling capital allocation plan provide for a long runway to enhance
shareholder value,” said Alex Sloane, Co-Founder of Cambridge Franchise
Holdings.
About Cambridge Franchise Holdings and Garnett Station Partners
Cambridge Franchise Holdings, controlled by Garnett Station Partners,
was founded in 2014 when Matt Perelman and Alex Sloane partnered with
Ray Meeks to grow his 23-unit Burger King® business. Since
2014, Meeks, Perelman and Sloane have grown Cambridge to include 165
Burger King® and 55 Popeyes® restaurants
throughout the Southeast. Garnett Station Partners, founded by
Co-Managing Partners Alex Sloane and Matt Perelman, is an investment
firm focused on retail and consumer companies.
About Carrols Restaurant Group, Inc.
Carrols is the largest Burger King® franchisee in the United
States and has operated Burger King® restaurants since 1976.
Following the Cambridge merger, Carrols operates 1,010 Burger King®
and 55 Popeyes® restaurants in 23 states. For more
information on Carrols, please visit the company's website at www.carrols.com.
Forward-Looking Statements
Any statements in this communication about the Company’s beliefs, plans
or forecasts, including statements regarding the proposed transaction,
the expected timetable for completing the transaction, benefits and
synergies of the transaction and future opportunities for the combined
company, that are not historical facts are forward-looking statements.
Forward-looking statements, written, oral or otherwise made, represent
Carrols' expectation or belief concerning future events. Without
limiting the foregoing, these statements are often identified by the
words "may", "might", "believes", "thinks", "anticipates", "plans",
"expects", "intends" or similar expressions. In addition, expressions of
our strategies, intentions, plans or guidance are also forward-looking
statements. Such statements reflect management's current views with
respect to future events and are subject to risks and uncertainties,
both known and unknown. You are cautioned not to place undue reliance on
these forward-looking statements as there are important factors that
could cause actual results to differ materially from those in
forward-looking statements, many of which are beyond our control.
Investors are referred to the full discussion of risks and uncertainties
as included in Carrols' filings with the Securities and Exchange
Commission.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190501005620/en/
Source: Carrols Restaurant Group, Inc.
Investor Relations:
800-348-1074, ext. 3333
investorrelations@carrols.com