JACKSONVILLE, FL / ACCESSWIRE / October 14, 2019 / ARC Group, Inc. (OTCQB:RLLY) (“ARC Group”), a restaurant holding company with a focus on diversified, full-service restaurants and brands, today announced it has acquired the WingHouse Bar & Grill® restaurant concept from Soaring Wings, LLC and its affiliates.
Under the terms of the Agreement, ARC Group acquired all the assets of Soaring Wings and its affiliates for a purchase price of $18 million, comprised of $12 million of cash paid at closing and $6 million of deferred compensation payable in the form of shares of ARC Group’s common stock. To fund the purchase price, ARC WingHouse, LLC, the subsidiary through which ARC Group completed the acquisition, entered into a loan agreement with City National Bank of Florida pursuant to which it borrowed $12.25 million.
WingHouse Bar & Grill first opened its doors over 25 years ago in Largo, Florida, where the concept to blend the spirit and camaraderie of sports with the casual atmosphere of a full-service restaurant was brought to life by NFL alum, Crawford Ker. Today, WingHouse has grown to 24 locations that span the state of Florida, generating more than $60.6 million in revenue and $3.5 million of cash flow from operating activities during 2018. Additional information about WingHouse Bar & Grill is available at https://winghouse.com/.
Seenu G. Kasturi, CEO of ARC Group, stated, “We are excited to add WingHouse Bar & Grill to our portfolio due to its established regional presence within a compelling segment, as we continue to aggressively expand our national footprint. This acquisition is consistent with our strategy of acquiring restaurants chains for which we can leverage our franchising, marketing, operational, logistics and financial expertise to drive sales growth and profitability. This transaction should provide us with significant scale as we project ARC Group’s combined annualized revenue will now exceed $70 million. Additionally, we expect this acquisition to immediately begin contributing to our operating cash flow.”
“We are honored to have Third Lake Capital, the majority owner of Soaring Wings, LLC, to become a major shareholder in ARC Group, since a considerable portion of the purchase price will be payable in the future through shares of our common stock,” continued Mr. Kasturi. “Specifically, under the terms of the Agreement, Soaring Wings will receive three tranches of $1 million each in ARC common stock on the first-, second- and third-year anniversaries of the closing date. These three stock issuances will be at $1.40 per share, $2.00 per share, and $3.00 per share respectively, a substantial premium to the current market price. We believe the fact they are willing to accept shares significantly above the current trading price further validates the synergies of this transaction and their confidence in the long-term outlook for our business.”
Ken Jones, CEO of Third Lake Capital, commented, “We are proud to partner with ARC Group, which has a strong track record of operational excellence and growth. We are pleased with what we have accomplished through our investment in WingHouse and are excited about what the future holds for this proven brand. We look forward to working with ARC Group to build upon the growth and success of WingHouse and, through our equity investment in ARC Group, share in the upside potential of this rapidly-growing company.”
Anish Gandhi of Brookwood Associates served as the investment banking advisor to Soaring Wings in the transaction.
About ARC Group, Inc.
ARC Group, Inc., headquartered in Jacksonville, Florida, is a holding company with a focus on the casual dining restaurant industry. ARC is the owner, operator and franchisor of Dick’s Wings & Grill®, a family-oriented restaurant chain with locations in Florida and Georgia. Now in its 25th year of operation, Dick’s Wings serves over 25,000 wings daily, and prides itself on its award-winning chicken wings, hog wings and duck wings spun in its signature sauces and seasonings. ARC operates four company-owned restaurants, three company-owned concession stands, and has 19 franchise locations. ARC also owns the Fat Patty’s® concept, with four locations in West Virginia and Kentucky. Fat Patty’s offers a number of specialty burgers and sandwiches, wings, appetizers, salads, wraps, and steak and chicken dinners in a family friendly, casual dining environment
Safe Harbor Provision
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are intended to be covered by the safe harbor created thereby. All statements other than statements of historical fact contained herein, including, without limitation, statements regarding the Company’s future financial position, business strategy, plans and objectives, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” or “believes” or the negative thereof or any variation thereon or similar terminology or expressions. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from results proposed in such statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can provide no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, those factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and its other filings and submissions with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements.
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SOURCE: ARC Group, Inc.
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