NZAX-listed fast food chain franchisor, BurgerFuel Worldwide, will raise $5.9 million from a new US investor to help fund its global growth aspirations, including plans to reach into the world’s biggest economy.
Connecticut-based Franchise Brands will buy a 10 per cent stake at $NZ1.35 apiece with an option to lift its holding to 50 per cent over eight years, and will support the New Zealand firm’s growth plans, including in the US where BurgerFuel plans to open restaurants, the company said in a statement on Tuesday.
The initial stake will be made up of a $NZ5.9 million ($A5.51 million) placement of new shares, and the purchase of $NZ2.16m of shares from controlling shareholder Mason Roberts Holdings. Once it’s completed, BurgerFuel will have cash reserves of between $NZ9m and $NZ10m and no debt, it said.
Franchise Brands was founded in 2005 to invest in small- and mid-sized companies seeking to expand their businesses, and is backed by the founders of the Subway restaurant chain, Fred DeLuca and Peter Buck. Its investments include Mama DeLuca’s Pizza, Personal Training Institute, HomeVestors and Taco Del Mar.
The deal was at a 10 per cent discount to the $NZ1.50 price the stock was trading at before the announcement, and the shares have since gained 11 per cent to $NZ1.66. That values the company at $NZ91.8m.
“This gives us the opportunity to turbocharge our business by going into the US and other countries, alongside the largest franchise company in the world,” CEO Josef Roberts said.
“BurgerFuel will retain control over its unique brand and operating style, and we will remain a publicly-listed New Zealand company.”
In December, the company said it was scaling up the next phase of its global development and would spending financial year 2014 investing in latching on to those opportunities.
In recent years, BurgerFuel has increased its exposure to the Middle East by signing master licensing agreements, which earns the company up-front territory fees and on-going royalties based on store turnover.
The deal needs shareholder approval, and the company said it would set a date for an extraordinary general meeting shortly.
The chain started in Auckland in 1995, and now has more than 30 stores across New Zealand. Burgerfuel has one store in Australia Newtown, Sydney.
The New Zealand company has 10 stores in the Middle East, across the UAE, Saudi Arabia and Iraq – with stores in Egypt and Qatar due to open in 2013.