Fog Cutter Capital Group Inc. (OTCMKTS:FCCG) Cashing In On FATBURGER IPO

Did you see what's going on with Fog Cutter Capital Group Inc. (OTCMKTS:FCCG)?The company, which is focused on the development of restaurant and commercial real estate mortgage brokerage operations, delivered big returns in a short period of time. Company LogoThe interesting fact is that nothing seemed to be declared from the part of this company, so nobody seemed to comprehend what's going on. This is actually what made us commence research on FCCG.Have a look at the share price action and form your opinion before we provide more details.Please note that the share price went from $0.25 to almost $2.25 in one month period. It represents 800% stock returns, which is quite astonishing. Additionally, the company went from trading less than 50 thousand shares to show a trading volume close to 150,000 shares on some days. 1 month chart for FCCGBusinessWe had a look at the last annual report to comprehend the company's situation. The company was founded in the State of Maryland on October 24, 1997. Initially, the company was called Wilshire Real Estate Investment Trust Inc., but on January 25, 2001, it changed its name to Fog Cutter Capital Group Inc. to reflect better the company's business objective. The company is headquartered in Santa Monica, California.According to the company materials, FCCG operates three business segments: Restaurant Business

• Restaurant Operations: the company owns large equity interest in Fatburger Restaurants "The Last Great Hamburger Stand". In our opinion, the recent news about this business was responsible for the share price jump.
• Manufacturing Operations: conducted through our wholly owned subsidiary, DAC International, which is a manufacturer of computer controlled lathes and milling machinery for the production of eyeglass, contact, and intraocular lenses.
• Real Estate and Financing Operations

We could also read that several subsidiaries of FCCG filed for bankruptcy on April 6, 2009. They included Fatburger Restaurants of California, Inc., and Fatburger Restaurants of Nevada, Inc. On November 3, 2009, debtors filed a joint plan of reorganization and related disclosure statement. We believe that the debt holders decided to sell the restaurant business to another company that will be celebrating its IPO soon.Recent Developments - The restaurant business segment is on fire with the IPO of Fat Brands Inc.What is happening?Nothing was said in Yahoo Finance or the OTC Markets about the IPO of FAT Brands Inc. This company is running right now a group of restaurants including the Fatburger Restaurants, Buffalo’s Cafe, and Buffalo’s Express restaurant concepts. It is not a small business. As of June 25, 2017, it had 176 total locations across seven states and 18 countries.Have a look at the following video, which is quite self-explanatory:[embed]https://player.vimeo.com/video/227848437[/embed]What market participants may not be understanding is hidden in the IPO materials. It is noted that 100% of FAT Brands Inc. is owned by FCCG. If the IPO is successful, the new subsidiary will receive $27 million in capital, which could make the share price of FCCG increase even more. In our opinion, this is the most significant catalyst on the stock.What's the stake that will be sold by FCCG?The company will be the owner of 80% of FAT Brands Inc. after the IPO, thus it will be selling 20%. It was explained as follows: IPO StructureFCCG will be contributing to the project with two operating subsidiaries, Fatburger North America Inc. and Buffalo’s Franchise Concepts Inc., and will receive unsecured promissory note with a principal balance of $30,000,000, bearing interest at a rate of 10.0% per annum, and maturing in five years. In our opinion, it is an extraordinary deal for the company. The market was right for pushing up the share price.ConclusionCurrently trading with a market cap of $24 million, FCCG is an interesting story among small caps. According to the last financial statements reported, the company has $0.3 million in cash, $22.3 million in total assets, and $35 million in total liabilities. Thus, the deal with Fat Brands Inc. is what's really driving up the share price up. It is the most significant catalyst for the stock.If the IPO is successful, FCCG will receive $30 million, which will clean up its balance sheet. Furthermore, its net asset value would be positive and the share price should jump up. There is still a lot to know about the financial situation of FCCG right now; the value of the assets that will be sold to Fat Brands Inc., and the financial situation of the new company. Thus, we encourage readers to stay on top of the latest developments.We will be updating our subscribers as soon as we know more. For the latest updates on FCCG, sign up below!Image courtesy of Michael Saechang via FlickrDisclosure: We have no position in FCCG and have not been compensated for this article.