The company at the head of the Fatburger franchise wanted to take advantage of the Ethereum blockchain to launch the acquisition of a new restaurant chain and introduce securities.
Securities linked to securitization will not all be issued on blockchain but the introduction of this technology, as reported by Forbes, is an important sign of maturity.
While the investment in the leading company Fatburger Fat Brands (Nasdaq: FAT) is not particularly high, the reality that designed the investment has great ideas for the future.
They are planning to raise up to $500 million by 2020, in a total debt securities market estimated at $117 trillion.
Andrew Wiederhorn, President and CEO of the company says:
“It’ll be a transformative event for Fat Brands, I’m certain that there will be a number of smaller franchise companies or restaurant companies that want to access the whole business securitization market”.
Wiederhorn says $25 million out of $39 million of debt securities will be used to refinance existing debt at a rate that he believes will save the company $2 million a year, while the remaining funds will be used to acquire new brands in the restaurant industry in the second quarter of 2020.
The company’s objective is to acquire up to two brands per year in the franchising sector, thus sharing the back office of different companies and optimizing costs. In this way, the portfolio will grow a lot and with it the scale dynamics that make this business profitable.
An airdrop system connected to the creation of stablecoins anchored to the dollar will allow, after the issue of security tokens, to pay the promised shares to the investors.
The transparency of the blockchain will make it possible to verify the financing trends, fixed-rate bond payments (about 7.75%) and everything that will mediate the financial relationships between investors and the parent company.
Payments will be quarterly.
Securities on Ethereum
This kind of digital asset element is unparalleled. The introduction of Ethereum certifies its great technological capacity and the confidence that the financial sector is placing in this instrument.
When an investor subscribes to the platform, the service provider automatically provides an Ethereum wallet address to the client. When there’s an investment opportunity on the market, the company creates a temporary smart contract that guarantees the pre-order for when the contract will actually close.
When the deal closes and the amount collected has allowed the new acquisition, an ERC20-compliant Ethereum token is coined and sent for every dollar collected.
The access of small investors to the group’s securities is driving the project’s vision for a future where these features will be used massively.
The new model is not clear to all because of the absence of comparative precedents, but the potential is under the eyes of all experts.