Twin Hospitality's FAT Brands Liquidity Falls As Preferred Dividends Suspended

2025-05-15 23:11:43 ET

Summary

• Twin Hospitality's FAT Brands faces a material wall of maturing debt linked to its 2021 acquisition that will prove hard to refinance.
• FAT recorded fiscal 2025 first quarter negative free cash flow of $17.76 million as revenue dipped from its year-ago comp.
• TWNP is losing $9.7 million per quarter with a long-term debt position that sat at $413 million as of the end of the first quarter.
• Unrestricted cash has fallen to $12.15 million as the company looks to raise more debt to plug its liquidity gap.

FAT Brands ( FAT ) ( FATBB ) suspended its quarterly dividend to common shareholders at the start of 2025, following up with a suspension of its monthly paid distribution to its preferred shareholders ( FATBP ) a few months later. I warned about the looming cuts in my prior coverage of the ticker. Fundamentally, the distributions were unsustainable for a company that ended its fiscal 2025 first quarter with long-term debt of $1.2 billion, a roughly 23x multiple of its current market and far in excess of cash, cash equivalents, and restricted cash of $41.5 million as of the end of the quarter. FAT ended the quarter with a total stockholders' deficit of $500 million , up $45 million sequentially, as its total liabilities reached $1.77 billion against total assets of $1.27 billion. With total assets 68.8% constituted by goodwill and intangible assets, the liquidation value of FAT's balance sheet, as per a crude total assets minus goodwill, could be much lower. FAT completed its spinoff of its Twin Peaks and Smokey Bones restaurant chain ( TWNP ) back in January but retains 95% ownership in the publicly traded entity. The performance of FAT is invariably interlocked with the performance of TWNP....

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