STK Steakhouse Chain to Go Public: Merger With Blank-Check Company Will Help Fund Expansion


Investors hungry to add upscale restaurants to their stock portfolios are about to get a new option: the STK steakhouse chain.

STK’s owner, One Group LLC, is merging with a so-called blank-check company in a deal that will take the chain public overnight, according to people familiar with the matter.

The company, which has seven STK locations and a hospitality business that provides food service for restaurants, bars and hotels, is merging with Committed Capital Acquisition Corp., a publicly traded shell company that has little more than the $28.8 million it is putting into the merger.

The merger is happening concurrently with investments of $15.5 million from institutional investors, who will become shareholders in the public company, as will Committed Capital’s backers, the people said.

The investments value the company at $5 a share, which is where the merged company is targeted to begin trading as One Group Inc. on Thursday, they said.

The company will have a stock market value of about $120 million, or about $150 million if warrants are exercised by other investors, they said.

One Group’s haul of about $44 million will be used to open new restaurants, retire some existing debt and buy out investors who took minority stakes in individual restaurants, the people said.

Shares of One Group will initially be traded “over the counter,” rather than on one of the big stock exchanges, though the company is aiming to list on the Nasdaq Stock Market and has had discussions about doing so with the exchange’s operator, Nasdaq OMX Group Inc., one of the people said.

The company expects revenue of about $130 million this year, up from about $6 million in 2006, the people said.

Investors have lately shown an appetite for high-end dining chains.

Del Frisco’s Restaurant Group Inc., DFRG 0.00% a chain of steakhouses, sold shares in an initial public offering last summer at $13. Since then shares have risen by about 40%, handily beating the market and giving the Southlake, Texas, company a market capitalization of about $434 million.

Last week, hedge fund Barington Capital Group LP and other investors announced a 2.8% stake in Darden Restaurants Inc., DRI 0.00% urging the dining conglomerate to separate its faster growing upscale brands, including Capital Grille and Eddie V’s from its larger chains, including Olive Garden and Red Lobster. Darden said it would evaluate the suggestion.

One Group decided to eschew a more traditional route to the public markets partly in the interest of speeding up its access to new capital, the people said. The company, which opened its first STK location in downtown Manhattan in 2006, is in the process of opening its eighth, in Washington, D.C., and has plans to add STKs in Chicago, Dubai, London, Montreal and elsewhere as well as launch a chain of smaller, less expensive restaurants under the name Rebel STK, one of the people said. Executives of One Group didn’t want to put their expansion plans on hold if matters out of their control prevented them from selling shares in an IPO, the people said.

STK, which caters to a younger, and more female, crowd than traditional steakhouses, has an average check of $113. That common performance metric used for high-end restaurants compares with $104 at Del Frisco’s top-end restaurants, according to a presentation One Group gave investors recently and Del Frisco filings.

Committed Capital was formed by New York-based Broadband Capital Management LLC, a firm that helps companies go public without IPOs. Among the companies it has helped onto the stock market are Jamba Juice owner Jamba Inc. and Swisher Hygiene Inc., a provider of restroom and sanitation products.

By | 2018-05-24T23:19:16-04:00 February 27th, 2014|News|