FWRG - First Watch to Acquire 21 Franchise Restaurants in North Carolina | Benzinga
Transaction Represents Acquisition of Largest Franchisee
Amends Credit Agreement to Support Acquisitive Growth
BRADENTON, Fla., Jan. 08, 2024 (GLOBE NEWSWIRE) -- First Watch Restaurant Group, Inc. (NASDAQ:FWRG) (together with its subsidiaries "First Watch" or the "Company"), the leading Daytime Dining concept serving breakfast, brunch and lunch, today announced it has agreed to acquire 21 of its franchise-owned restaurants and corresponding development rights in North Carolina for an aggregate purchase price of $75 million on a cash-free, debt-free basis, subject to certain customary adjustments.
"Our acquisition of franchise-operated restaurants is an important part of our long-term growth and value creation strategy, and this represents our most significant transaction to date," said Chris Tomasso, First Watch CEO & President. "We expect these 21 restaurants in one of our key markets will generate average unit volumes and restaurant level operating profit margins in line with our Company-owned restaurants and provide us with additional territories in which to grow organically for years to come. We look forward to welcoming the teams from these restaurants, who have served their communities in North Carolina for nearly 10 years, to our You First culture."
First Watch's acquisition of its largest franchisee's restaurants is expected to close by the end of April pending completion of certain customary closing conditions. With this transaction, First Watch will have acquired 44 total franchised restaurants across five accretive acquisitions since May 2023. Each of these acquisitions was subject to a purchase option negotiated prior to First Watch's initial public offering. The Company will provide additional information regarding the transaction when it reports results of the first fiscal quarter ended March 31, 2024.
In connection with the entry into the acquisition agreement described above, the Company amended its existing credit agreement to provide for (i) a new $125 million delayed draw term facility with 18-month availability for permitted franchisee acquisitions and new restaurant construction, (ii) a replacement revolving credit facility with $125 million of commitments (increased from $75 million previously), and (iii) a new $100 million term loan A facility, replacing the prior $100 million term loan A facility, in each case, with substantially similar terms and a new maturity date five years following the closing date.
"The amended credit agreement provides the Company with increased financial flexibility. We anticipate accessing the new delayed draw facility upon the closing of this franchisee restaurant acquisition," said Mel Hope, First Watch Chief Financial Officer. "We intend to continue our practice of maintaining a conservative balance sheet and leverage profile."
Additional details on the amended credit agreement and the acquisition agreement, including copies of the amended credit agreement and the acquisition agreement, can be found in the Company's Current Report on ...