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After $380M merger, TGI Fridays going public again

Merger with SPAC creates clean balance sheet, future funding mechanism

TGIF Holdings, the parent of TGI Fridays, and Allegro Merger Corp., a special company created for the public offering, or SPAC, announced a merger and subsequent public offering. Allegro will assume $350M of debt of the casual-dining chain. With TGI Fridays going public, the company tapped Ray Blanchette to lead the chain after the merger. He served as CEO at Au Bon Pain, Ignite Restaurant Group and Ruby Tuesdays. The $380M merger should wipe Fridays’ debt slate clean, with the public markets funding future growth.

As part of the proposed agreement, TriArtisan Capital Advisors will exchange their majority share, while MFP Partners will trade 100 percent of its ownership. TriArtisan and Sentinel acquired TGI Fridays in 2014. MFP is led by Michael F. Price.

The current TGIF shareholders will receive $30 million in addition to Allegro stock. Based on the future performance of the company, the shareholders are eligible to receive an additional two million shares. Allegro valued the merged company’s shares at $10.16.

TGI Fridays-Allego merger next steps

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Also, the deal is subject to approval by TGI Fridays and Allegro stockholders. In addition, the investment period for the SPAC will be extended through March 31, 2020. Shareholders will approve the deal in the first quarter of 2020, which coincides with the SPAC investment period. With TGI Fridays going public again, investors recall its IPO back in 1983 with Goldman Sachs.

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Some may also recall Bllanchette’s decision-making in the frightful purchase of Romano’s Macaroni Grill when he was Ignite chief executive. According to Business Journals, Ignite bought the chain and sold it for $47M less than it paid for Macaroni Grill just two years later. Ignite filed for bankruptcy in 2017.

“Allegro’s Board and I believe that Fridays is an unparalleled iconic international brand and we are excited to be able to bring this opportunity to our shareholders” said Eric Rosenfeld, chief executive of Allegro. “Fridays’ highly predictable stream of franchise and licensing revenue is very attractive and we believe that Fridays provides a compelling value to our shareholders,” he added.

Allegro trades under Nasdaq symbols ALGR, ALGRU, ALGRR, and ALGRW.

Fridays, an iconic, casual-dining chain

Founded in 1965, TGI Fridays serves customers in the bar and grill sub-segment of casual dining. Moreover, TGI Fridays operates and franchises 396 domestic restaurants and 442 international units. According to the announcement, restaurants have an average unit volume of $2.7M.

Franchisees own 83 percent of TGI Fridays’ restaurants. Also, franchising and licensing bring in 70 percent of the chains’ profits. Furthermore, the companies will discuss TGI Fridays going public again on a conference call Monday, November 11.

Photo credit: TGI Fridays

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TGI Fridays deal summary