TSX Trading Symbol: "MTY"
MONTREAL, Sept. 9, 2016 /PRNewswire/ - MTY Food Group Inc.
("MTY" or the "Company") (TSX: MTY) announced today that one of its
wholly-owned subsidiaries has signed an agreement to acquire all of
the equity interest of BF Acquisition Holdings, LLC. ("BFAH")
(www.bajafresh.com and www.lasalsa.com).
Stanley Ma, Chairman of the Board
and Chief Executive Officer of MTY, said: "Following the addition
of Kahala last month, MTY intends to continue and accelerate its
growth throughout North America,
leveraging both its US platforms and Canadian platforms to acquire
profitable restaurant concepts. The acquisition of
Baja Fresh Mexican Grill and La
Salsa Fresh Mexican Grill perfectly aligns with our growth strategy
and is one more step towards building a bigger and better
organization for the future."
Transaction and rationale
BFAH currently franchises and operates 162 Baja Fresh Mexican
Grill ("Baja") and 23 La Salsa Fresh Mexican Grill ("La Salsa")
restaurants in the USA,
Dubai and Singapore. Of those
185 restaurants, 16 are corporately-owned and 169 are franchised.
During 2015, the BFAH network generated over US$145 million in system sales.
The acquisition of Baja and La Salsa represents another major
milestone for MTY as it solidifies its presence in the United States and confirms MTY's appetite
for good quality acquisition opportunities regardless of the
geographical location of their restaurants.
Following the transaction, BFAH's head office will be moved in
MTY's office in Scottsdale,
Arizona. The transition is expected to happen before the end
of MTY's 2016 fiscal period.
Conditions and regulatory approvals
The agreement is binding but remains subject to multiple
conditions, including standard regulatory approvals, financing and
other conditions customary for a transaction of this nature.
Financing
Total consideration for the transaction is estimated at
US$27 million in cash, to be financed
using MTY's existing credit facilities. The final purchase price
remains subject to customary working capital adjustments.
Closing of the transaction
The closing of the transaction is expected to happen within the
next 30 days. There is no assurance the transaction will be
completed as described above or at all, or that the anticipated
closing date will materialize.
Non‑IFRS Measures
This News Release makes reference to certain non‑IFRS measures.
These measures are not recognized measures under IFRS, do not have
a standardized meaning prescribed by IFRS and are therefore
unlikely to be comparable to similar measures presented by other
companies. Rather, these measures are provided as additional
information to complement those IFRS measures by providing further
understanding of the Company's results of operations from
management's perspective. Accordingly, they should not be
considered in isolation nor as a substitute for analysis of the
Company's financial information reported under IFRS. The Company
uses non-IFRS measures including "System Sales" and "EBITDA" to
provide investors with supplemental measures of its operating
performance and thus highlight trends in its core business that may
not otherwise be apparent when relying solely on IFRS financial
measures. The Company also believes that securities analysts,
investors and other interested parties frequently use non-IFRS
measures in the evaluation of issuers. The Company's management
also uses non-IFRS measures in order to facilitate operating
performance comparisons from period to period, to prepare annual
operating budgets, and to determine components of management
compensation.
"System Sales" represents the net sales received from restaurant
guests at both corporate and franchise restaurants including
take-out and delivery customer orders. System Sales includes sales
from both established restaurants as well as new
restaurants. Management believes System Sales provides
meaningful information to investors regarding the size of MTY's
restaurant network, the total market share of the Company's brands
and the overall financial performance of its brands and restaurant
owner base, which ultimately impacts MTY's consolidated financial
performance.
"EBITDA" is defined as net earnings (loss) from continuing
operations before net interest expense and other financing charges,
losses (gains) on derivative, income taxes, depreciation of
property, plant and equipment, amortization of intangible assets,
and impairment of assets, net of reversals.
Forward looking information
Certain information in this News Release constitutes
"forward-looking" information that involves known and unknown
risks, uncertainties, future expectations and other factors which
may cause the actual results, performance or achievements of the
Company to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking information. When used in this News Release,
this information may include words such as "anticipate",
"estimate", "may", "will", "expect", "believe", "plan" or
variations of such words and phrases, or by the use of words or
phrases which state that certain actions, events or results may,
could, would, or might occur or be achieved. In particular,
this News Release contains forward-looking information regarding:
the completion of the BFAH acquisition, the potential closing date
of the BFAH acquisition and the potential impact of the BFAH
acquisition on the Company's future operations; opportunities,
growth and United States
expansion; the suitability of the BFAH acquisition by the Company;
the effect of the BFAH acquisition on BFAH stakeholders; the
location of MTY's United States
head office and where MTY's United
States operations will be managed; the retention of BFAH's
management team; the expected EBITDA, revenue, system sales and
potential growth of the combined entity; potential future
acquisition opportunities; and the continuing payment of dividends
by the Company. This forward-looking information reflects
current expectations and assumptions regarding future events and
operating performance and speaks only as of the date of this News
Release. These assumptions include, but are not limited to:
currency exchange rates used to derive Canadian dollar
expectations; market acceptance of the BFAH acquisition; the
satisfactory fulfilment of all of the conditions precedent to the
BFAH acquisition; the receipt of all required approvals and
consents including regulatory, TSX, shareholder and any other
approvals; acceptable financing to complete the BFAH acquisition;
future results of BFAH's business and operations meeting or
exceeding historical results; the success of the integration of
BFAH's operations and management team with the Company's operations
and business; and market acceptance of potential future
acquisitions by the Company. Forward-looking information is
subject to known and unknown risks, uncertainties and other factors
that may cause the actual results, level of activity, performance
or achievements of the Company to be materially different from
those expressed or implied by such forward-looking information.
Such risks and other factors may include, but are not limited to:
currency exchange rates, general business, economic, competitive,
political, capital market and social conditions and uncertainties;
the intensity of competitive activity, and the resulting impact on
our ability to attract customers' disposable income; our ability to
secure advantageous locations and renew our existing leases at
sustainable rates; the arrival of foreign concepts; our ability to
attract new franchisees; changes in customer tastes, demographic
trends and in the attractiveness of our concepts, traffic patterns,
occupancy cost and occupancy level of malls and office towers; the
level of consumer confidence and spending and the demand for, and
prices of, our products; our ability to implement our strategies
and plans in order to produce the expected benefits; events
affecting the ability of third-party suppliers to provide to us
essential products and services; labour availability and cost or
the loss of key individuals; stock market volatility; operational
constraints and the event of the occurrence of epidemics, pandemics
and other health risks; delay or failure to receive board or
regulatory approvals; changes in legislation affecting the Company.
Expected EBITDA, revenue, system sales and growth could
vary due to fluctuations in currency exchange rates.
A description of additional assumptions used to develop such
forward-looking information and a description of additional risk
factors that may cause actual results to differ materially from
forward-looking information can be found in the disclosure
documents on the SEDAR website at www.sedar.com. Readers are
further cautioned not to place undue reliance on forward-looking
information as there can be no assurance that the plans, intentions
or expectations upon which they are placed will
occur. Forward-looking information contained in this News
Release is expressly qualified by this cautionary
statement. Except as required by law, the Company assumes no
obligation to update or revise forward-looking information to
reflect new events or circumstances. Financial outlooks
contained in this News Release were approved by management of the
Company on May 25, 2016. The
purpose of this information is to provide a potential financial
outlook of the combined entity and this information may not be
appropriate for other purposes. Additional information is
available in the Company's Management Discussion and Analysis,
which can be found on SEDAR at www.sedar.com.
On Behalf of the Board of Directors of
MTY Food
Group Inc.
_____________________________________
Stanley Ma, Chairman, President & CEO
SOURCE MTY Food Group Inc.