Carrols agrees to remodel 450 Burger King restaurants as part of the deal.
Carrols Restaurant Group has agreed to purchase 278 company-owned restaurants from Burger King Corp. The deal includes restaurants in Ohio, Indiana, Kentucky, Pennsylvania, North Carolina, South Carolina and Virginia.
As part of the transaction, Carrols will lead the Burger King system in its remodeling program by committing to remodel approximately 450 restaurants over the next three and half years, to the brand's 20/20 restaurant image.
Carrols, the largest Burger King franchisee in the United States, is in the process of completing its spin-off to its shareholders of Fiesta Restaurant Group, Inc., which owns and operates its Pollo Tropical and Taco Cabana restaurant brands. The acquisition of Burger King Corp.'s restaurants is conditioned upon, and is expected to close following the completion of, the spin-off as well as a financing to fund the restaurant remodeling program, cash paid to Burger King in connection with the transaction and to refinance Carrols LLC's existing senior secured credit facility. Upon completion of the transactions, Carrols will operate only Burger King restaurants and will become the system's largest franchisee globally with 575 restaurants. Carrols anticipates that the spin-off of Fiesta will be complete in April.
Burger King's compensation will include a 28.9 percent equity interest in Carrols, after the spin-off of Fiesta, and total cash payments of approximately $15.8 million. The cash consideration covers refranchising fees of $9.4 million, inventory of approximately $2.5 million and payments to be made over five years by Carrols in conjunction with Burger King's assignment to Carrols of its right of first refusal on sales of restaurants by existing franchisees in 20 states.