Chanticleer Holdings Inc (NASDAQ:HOTR) Just Spiked: What's Next?

Chanticleer Holdings Inc (NASDAQ:HOTR) is an early week runner this week on the back of some fresh balance sheet news. At last count, the company traded for $0.50 a share – a 100% run on the $0.25 a share recorded towards the end of last week. A couple of questions are worth asking right now. The first is how far can this run take Chanticleer? The second is can forward action maintain the overarching upside trend? In other words, was last week's low a longer term bottoming out?Let's try and figure out the answer to both of these questions.For those new to Chanticleer, this one is a US-based restaurant stock. It's essentially a holding company for a spectrum of different branded franchises, including American Burger Company, Burgers Grilled Right, Little Big Burger, Just Fresh and Hooters. It is one of those companies that has long been on the radar investors at this end of the space and has drawn a considerable amount of speculative attention from traders over the years. However, overarching action hasn't been particularly kind to the company or its longer term shareholders. Before the latest run up, Chanticleer shareholders were sitting on a close to 70% 12-month loss.So what has brought about the shift in gear?As noted, the action is rooted in the company's announcing of the completion of a private placement. It's a combination of debentures and share purchase warrants for total proceeds of $6 million with certain so-called strategic investors. Among these investors are a couple through which joint venture efforts have been created, with a specific focus on the­ Little Big Burger brand mentioned above.The real value in the announcement is its impact on some outstanding debt held by Chanticleer. The company was paying 12% interest on $5 million worth of debt and this was severely impeding its ability to allocate capital towards expansion and operational efforts. With the $6 million raised on the back of the recent financing, management is able to pay off this debt in full. The debentures have an interest rate of 8% annual associated with them, due quarterly, so what this has essentially done is added a bit of operational capital to the balance sheet, but primarily, saved the company 4% in annual interest on a $5 million liability. That's why Chanticleer is spiking, and we see the shift it sentiment as likely being maintained going forward.Beyond the interest rate impact, the arrangement also serves to align the company's interests with the above noted Big Little Burger partners, and at market open today, management put out a fresh press release reinforcing this alignment. It is a multi-unit deal that should see Chanticleer open a minimum of eight Little Big Burger locations in Southern California by 2021.That's a pretty aggressive expansion strategy, and it will not likely going to bring with it a certain degree of dilution, but from a shareholder perspective, this dilution looks to be well worth shouldering given the revenue potential of the added store count.Earnings should hit press next week and have the potential to induce some headline-driven upside, as well as, in turn, helping to compound the bullish sentiment we are seeing early this week.Revenues for the fourth quarter of 2016 (the most recent reporting period) came in at $9.9 million for a net loss of $1.9 million. We like to see a topline increase and – perhaps more importantly – a narrowed net loss as indicative of management's success in its efforts to allocate efficiently whilst expanding.Looking at our questions, then, chances are we will see a very near term correction as traders take profits off the table, but if earnings come in positive, there looks to be no reason why we can't see a continuation of the upside momentum as 2017 matures.Dilution is always a risk with this sort of play, but if Chanticleer can keep operational growth on track, share price growth should follow.We will be updating our subscribers as soon as we know more. For the latest updates on HOTR, sign up below!Disclosure: We have no position in HOTR and have not been compensated for this article.