Red Robin Gourmet Burgers and Brews (RRGB) issues stock to raise funds to reduce debt
Category: Red Robin (RRGB)
Date: 21 June 2020 Stock price of Red Robin: $11.42 We take a look at a press release from Red Robin in which the group announced that they issued stock to raise funds which will be used for general corporate purposes including debt repayments. They aim to raise $30 million with the stock issue, with JP Morgan being the book runner for the stock issue.
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Red Robin Gourmet Burgers and Brews, is the Gourmet Burger Authority™, famous for serving more than two dozen craveable, high-quality burgers with Bottomless Steak Fries® in a fun environment welcoming to Guests of all ages."
More About Red Robin Gourmet Burgers and Brew
Red Robin Gourmet Burgers, Inc. (www.redrobin.com), a casual dining restaurant chain founded in 1969 that operates through its wholly-owned subsidiary, Red Robin International, Inc., and under the trade name, Red Robin Gourmet Burgers and Brews, is the Gourmet Burger Authority™, famous for serving more than two dozen craveable, high-quality burgers with Bottomless Steak Fries® in a fun environment welcoming to Guests of all ages. At Red Robin, burgers are more than just something Guests eat; they’re a bonding experience that brings together friends and families, kids and adults. In addition to its many burger offerings, Red Robin serves a wide variety of salads, soups, appetizers, entrees, desserts, and signature beverages. Red Robin offers a variety of options behind the bar, including its extensive selection of local and regional beers, and cocktails. It’s now easy to take Red Robin anywhere with online ordering for to-go and Gourmet Burger Bar catering pickups through Yummm2Go. There are more than 452 Red Robin restaurants across the United States and Canada, including those operating under franchise agreements
Red Robin Gourmet Burgers press release relating to issue of stock to raise funds
GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--Jun. 17, 2020-- Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB) (“Red Robin” or the “Company”), a full-service restaurant chain serving an innovative selection of high-quality gourmet burgers in a family-friendly atmosphere, today announced that it has successfully raised approximately $30 million through its “at-the-market” equity offering program (the “ATM Program”), satisfying the terms of its amended credit agreement.
The issuance of this equity meets the “Minimum Capital Event” as defined in the First Amendment to Credit Agreement and Waiver to the Company’s Amended and Restated Credit Agreement. Therefore, the lenders have suspended the application of the Leverage Ratio Covenant and FCCR Covenant, in each case, through December 27, 2020 and increased the maximum leverage permitted for purposes of the Leverage Ratio Covenant for each of the first three fiscal quarters ending in 2021.
The Company intends to use the net proceeds from sales of shares of its common stock under the ATM Program (the “Shares”) for general corporate purposes, including repayment of indebtedness.
The Shares are being offered through J.P. Morgan Securities LLC (“J.P. Morgan”), as distribution agent. J.P. Morgan may sell the Shares by any method permitted by law deemed to be an “at-the-market offering” as defined in Rule 415 of the Securities Act of 1933, as amended, by means of ordinary brokers’ transactions on the Nasdaq Global Select Market or into any other existing trading market for the Shares and such other sales as agreed upon by the Company and J.P. Morgan, including to J.P. Morgan as principal for its own account. Sales may be made at market prices prevailing at the time of the sale, at prices related to prevailing market prices or at negotiated prices and, as a result, sales prices may vary.
The Company’s prospectus supplement filed on June 16, 2020 with the Securities and Exchange Commission (“SEC”) adds to, updates or otherwise changes information contained in the accompanying prospectus contained in a shelf registration statement on Form S-3 (File No. 333-238806) for the offering of Shares. Prospective investors should read the prospectus, the prospectus supplement and other documents the Company has filed with the SEC (some of which are incorporated by reference into the prospectus and prospectus supplement) for more complete information about the Company, the ATM Program and the risks the Company currently is facing due to the spread of COVID-19. You may obtain copies of the prospectus supplement and accompanying prospectus relating to the offering without charge by visiting the SEC’s website at www.sec.gov or by contacting J.P. Morgan Securities, LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, Attention: Prospectus Group or by calling toll free at (866) 803-9204.
This press release is for informational purposes only and is not an offer to sell or the solicitation of an offer to buy any Shares of the Company, which is made only by means of a prospectus supplement and related prospectus. There will be no sale of Shares in any jurisdiction in which the offer, solicitation of an offer to buy or sale would be unlawful.
The issuance of this equity meets the “Minimum Capital Event” as defined in the First Amendment to Credit Agreement and Waiver to the Company’s Amended and Restated Credit Agreement. Therefore, the lenders have suspended the application of the Leverage Ratio Covenant and FCCR Covenant, in each case, through December 27, 2020 and increased the maximum leverage permitted for purposes of the Leverage Ratio Covenant for each of the first three fiscal quarters ending in 2021.
The Company intends to use the net proceeds from sales of shares of its common stock under the ATM Program (the “Shares”) for general corporate purposes, including repayment of indebtedness.
The Shares are being offered through J.P. Morgan Securities LLC (“J.P. Morgan”), as distribution agent. J.P. Morgan may sell the Shares by any method permitted by law deemed to be an “at-the-market offering” as defined in Rule 415 of the Securities Act of 1933, as amended, by means of ordinary brokers’ transactions on the Nasdaq Global Select Market or into any other existing trading market for the Shares and such other sales as agreed upon by the Company and J.P. Morgan, including to J.P. Morgan as principal for its own account. Sales may be made at market prices prevailing at the time of the sale, at prices related to prevailing market prices or at negotiated prices and, as a result, sales prices may vary.
The Company’s prospectus supplement filed on June 16, 2020 with the Securities and Exchange Commission (“SEC”) adds to, updates or otherwise changes information contained in the accompanying prospectus contained in a shelf registration statement on Form S-3 (File No. 333-238806) for the offering of Shares. Prospective investors should read the prospectus, the prospectus supplement and other documents the Company has filed with the SEC (some of which are incorporated by reference into the prospectus and prospectus supplement) for more complete information about the Company, the ATM Program and the risks the Company currently is facing due to the spread of COVID-19. You may obtain copies of the prospectus supplement and accompanying prospectus relating to the offering without charge by visiting the SEC’s website at www.sec.gov or by contacting J.P. Morgan Securities, LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, Attention: Prospectus Group or by calling toll free at (866) 803-9204.
This press release is for informational purposes only and is not an offer to sell or the solicitation of an offer to buy any Shares of the Company, which is made only by means of a prospectus supplement and related prospectus. There will be no sale of Shares in any jurisdiction in which the offer, solicitation of an offer to buy or sale would be unlawful.
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Red Robin Gourmet Burgers and Brews (RRGB) stock price history
The image below shows the stock price history of Red Robin (RRGB) over the last 3 years. And it's not been a good time for Red Robin (RRGB) stockholders over the last 3 years. Over the last 3 years the stock of Red Robin (RRGB) declined by -82.13%. Its a wonder the group has any investors left. The image below shows the impact the coronavirus has had on their stock price, due to stay at home orders and lockdowns across the US stopping clients from visiting their restaurants.
Our latest stock valuation of Red Robin (11 June 2020)
So what is Red Robin Gourmet Burgers stock worth after the release of their 1st quarter 2020 earnings report? Based on RRGB's latest earnings report and the fact that they are loss making we value to stock of RRGB at their stockholders equity per share. We therefore value Red Robin Gourmet Burgers at $14.20 a stock. We therefore feel the stock of Red Robin Gourmet Burgers is fully valued at its current price.
We usually recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price which in this case is $14.20. We see a good entry point into the stock of Red Robin Gourmet Burgers at $12.80 or below.
We expect the stock of Red Robin Gourmet Burgers to trade in a narrow range around its current price in coming weeks and months.
We usually recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price which in this case is $14.20. We see a good entry point into the stock of Red Robin Gourmet Burgers at $12.80 or below.
We expect the stock of Red Robin Gourmet Burgers to trade in a narrow range around its current price in coming weeks and months.