Fiesta Restaurant Group, Inc. Closes the Sale of Taco Cabana

Fiesta Restaurant Group, Inc. (NASDAQ: FRGI) today announced that it has completed the sale of all of the outstanding capital stock of Taco Cabana, Inc., the parent company of the Taco Cabana business, to YTC Enterprises, LLC, an affiliate of Yadav Enterprises, Inc., and that the board of directors have approved the resumption of the Company’s share repurchase plan.

Taco Cabana Sale Completed

The stock purchase agreement provides for a cash purchase price of $85.0 million, less total closing adjustments estimated at $7.2 million to $8.0 million(1), resulting in estimated net proceeds of $77.0 million to $77.8 million. These net proceeds were used to fully repay Fiesta’s approximately $74.6 million of outstanding term loan borrowings under its senior credit facility and to pay certain divestiture transaction fees and a loan prepayment premium totaling approximately $4.2 million(2).

As of July 4, 2021, the Company had $65.8 million in cash and $3.8 million in restricted cash. As previously announced, subsequent to the transaction close, a portion of these funds will be used for investments to accelerate Pollo Tropical’s growth.

Previously Approved Share Repurchase Program to be Resumed

The board of directors has also directed the Company to resume its share repurchase program. The board of directors had previously authorized the repurchase of an aggregate 3.0 million shares of common stock, of which 1,006,505 shares remain available for purchase.

Under the share repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The number of shares repurchased and the timing of repurchases will depend on a number of factors, including, but not limited to, stock price, trading volume, general market and economic conditions, and other corporate considerations. The share repurchase program has no time limit and may be modified, suspended, superseded or terminated at any time by the board of directors.

1)

 

Closing adjustments of $4.5 million and working capital adjustments estimated at $2.7 million to $3.5 million.

2)

 

Amount comprised of a loan prepayment fee of 3% of the principal repaid of $2.2 million and certain divestiture transaction fees of approximately $2.0 million. As part of the transaction, non-cash expense of $3.1 million will be recorded for the unamortized debt discount and debt issuance costs from the existing senior credit facility during the third quarter of 2021.