FAT Brands, Inc.

FAT Brands Inc. (FAT) Accused of Misrepresenting Its Sales Growth and Cash Flow in Its Offering Documents

According to the class action complaint, on October 23, 2017, FAT Brands Inc. (FAT) held its IPO, selling 2 million shares of common stock and raising $24 million in gross proceeds.  FAT officials subsequently emphasized that FAT’s asset-light business model allows for growth with minimal capital expenditures through franchising.  Despite these representations, FAT’s then-present free cash flow was not enough to cover its outsized dividend.  In addition, at the time of the IPO, FAT failed to disclose that its sales growth had significantly declined and that the fast-casual dining sector was facing slowdown in growth due to customers fleeing to lower cost, quicker fast-food chains. When the market learned the truth about FAT’s business metrics and financial prospects, FAT’s stock plummeted, and now trades less than $8 per share, a 34% decrease from its IPO price.

FAT Brands Inc. (FAT) Shareholders Have Legal Options

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