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Fiesta Restaurant Group agrees to sell Taco Cabana to Yaday affiliate

FRG to use proceeds of sale to pay down debt, invest in Pollo Tropical expansion

Fiesta Restaurant Group (FRG) has agreed to sell Taco Cabana to YTC Enterprises, an affiliate of Yaday Enterprises, for $86M in cash, subject to working capital adjustments of $7M to $9M. Yaday operates nearly 400 restaurants in Northern California, Texas and sixteen additional states.

Sale proceeds will be used to pay down debt, including a senior credit facility of $74.6M and a prepayment premium of about $4.6M. The Board may use incoming cash to speed expansion of Taco Cabana sister company Pollo Tropical and potentially for stock repurchases once the transaction is complete.

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“We made the strategic decision to sell the Taco Cabana business to allow our leadership team to focus completely on accelerating Pollo growth, and we are very excited about the tremendous growth opportunities we have for the Pollo Tropical business,” said Rick Stockinger, Fiesta chief executive.

He suggested he’s confident in the future of Taco Cabana under Yaday’s leadership.

Stockinger added,“We believe the Taco Cabana sale will provide great value to our shareholders, allowing us to create a more effective, efficient and focused organization, applying appropriate resources to accelerate delivery of the exciting growth potential we have in our Pollo Tropical brand. This will include our continued efforts to drive an upgraded customer experience across all service channels, continuing to invest in expanding our growing digital platform and finalizing our new unit expansion plans targeted for 2022.”

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Fiesta Restaurant Group executives plan to invest in the Pollo Tropical customer experience, build the digital platform and expand the footprint of the quick-service concept in 2022.

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