Billionaire Tilman Fertitta agreed to pay up to $33 million to remove Fertitta Entertainment from a $8.6 billion merger with a special purpose acquisition company.
“At the end of the day we ultimately determined that the right decision for my company was to remain private at this time, and I look forward to continuing to grow our business both organically and in-organically,” Fertitta said in a statement.
Fertitta Entertainment, parent of the Golden Nugget casinos and restaurant conglomerate Landry’s, announced in February that it planned to go public through a merger with FAST Acquisition Corp., a company led by co-CEOs Sandy Beall, the founder of Ruby Tuesday, and Doug Jacob, who helped launch &pizza. A special purpose acquisition company (SPAC) is a shell corporation intended to raise capital through an IPO and merge with an existing entity. The deal was originally valued at $6.6 billion, but the deal was bolstered in June to include more restaurant assets.
However, Fertitta Entertainment submitted a termination notice since the deal didn’t close by the December 1 deadline. In response, FAST argued that parties directly responsible for the agreement not closing cannot terminate the transaction. It further noted that Fertitta delivered certain financial statements four months late, and that this delay was “unquestionably the primary cause of the failure of the Closing to occur by the Termination Date.”
FAST claimed the breach would cause “irreparable injury” and that it intended to “initiate litigation” if the breach wasn’t remedied. But the issue now appears to be resolved with Fertitta’s multi-million dollar payment.
The money will be used to cover expenses related to the terminated transaction and to replenish FAST’s working capital account. The company will seek a merger with another company.
“FEI [Fertitta Entertainment Incorporated] is an incredible hospitality empire run by the one of the world’s best operators that we have had a first-hand view into for many years now,” Jacob said in a statement. “We wish Tilman and his team the best of luck as they remain a private company. Through this settlement we ensured that we are sufficiently capitalized to seek a new target and that we could continue our efforts to maximize value for our shareholders.”
The SPAC and its shareholders will receive the funds through a combination of upfront and deferred payments, which is contingent on FAST finalizing a merger with another company. SPACs have two years to close a deal, which means FAST has until August 2022 before it must liquidate.