CHANTICLEER HOLDINGS, INC. (NASDAQ:HOTR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
Merger Agreement
On October 10, 2019, Chanticleer Holdings, Inc., a Delaware corporation (“Chanticleer”), entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with Sonnet BioTherapeutics, Inc., a New Jersey corporation (“Sonnet”), and Biosub Inc., a Delaware corporation and wholly-owned subsidiary of Chanticleer (“Merger Sub”). Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, including approval of the transaction by Chanticleer’s shareholders and Sonnet’s shareholders, Merger Sub will be merged with and into Sonnet (the “Merger”), with Sonnet surviving the Merger as a wholly-owned subsidiary of Chanticleer. The shareholders of Sonnet will become the majority owners of Chanticleer’s outstanding common stock upon the closing of the Merger. Additionally, as part of this transaction, Chanticleer will spin-off its current restaurant operations, including all assets and liabilities, into a newly created entity (the “Spin-Off Entity”), the equity of which will be distributed out to the current stockholders of Chanticleer. Terms of the Merger include a payment of $6,000,000 to Chanticleer from Sonnet, a portion of which is intended to repay certain of Chanticleer’s outstanding indebtedness in conjunction with the spin-off of the existing Chanticleer assets and liabilities.
Prior to the execution of the Merger Agreement, the Board of Directors of Chanticleer (the “Board”), unanimously (i) determined that the terms and provisions of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, advisable and in the best interests of the Company and its shareholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, (iii) determined that it is advisable and in the best interests of the Company and its shareholders to enter into the Merger Agreement and to consummate the transactions contemplated thereby, including the Merger, and (iv) resolved to recommend the adoption of the Merger Agreement by the shareholders of the Company (the “Company Board Recommendation”).
to the Merger Agreement, each share of common stock of Sonnet, no par value per share (the “Sonnet Common Stock”) (other than Cancelled Shares (as defined in the Merger Agreement) and Dissenting Shares (as defined in the Merger Agreement)), issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) shall be automatically converted into the right to receive an amount of shares of common stock, par value $0.0001 per share, of Chanticleer ( “Chanticleer Common Stock”) equal to the Common Stock Exchange Ratio (as defined in the Merger Agreement) (the “Merger Consideration”). As a result, immediately following the Effective Time, the former Sonnet shareholders will hold approximately 94% of the outstanding shares of Chanticleer Common Stock and the shareholders of Chanticleer will retain ownership of approximately 6% of the outstanding shares of Chanticleer Common Stock. In addition, at the closing of the Merger, Chanticleer will issue to the Spin-Off Entity a warrant to purchase that number of shares of Chanticleer Common Stock equal two percent (2%) of the number of shares of issued and outstanding Chanticleer Common Stock of Chanticleer at Closing. The Warrant will be a five year warrant, will have an exercise price of $0.01 per share and will not be exercisable for 180 days following the Closing. Upon completion of the Merger, Chanticleer will change its name to Sonnet BioTherapeutics Holdings, Inc.
Subject to approval of the Nasdaq Stock Market LLC (“Nasdaq”), the proposed Merger will result in a publicly-traded company operating under the Sonnet name and the proposed Nasdaq ticker symbol “SONN” that will focus on advancing Sonnet’s pipeline of oncology candidates and the strategic expansion of Sonnet’s technology platform into other human diseases. Sonnet is a clinical stage, oncology-focused biotechnology company with a proprietary platform for innovating biologic medicines of single- or bi-specific action. Known as FHAB™ (Fully Human Albumin Binding), the technology utilizes a fully human single chain antibody fragment (scFv) that binds to and “hitch-hikes” on human serum albumin (HSA) for transport to target tissues. FHAB is the foundation of a modular, plug-and-play construct for potentiating a range of large molecule therapeutic classes, including cytokines, peptides, antibodies and vaccines, across a range of disease areas. Sonnet’s pipeline of therapeutic compounds for oncology indications of high unmet medical need includes lead candidate, SON-080, a fully human version of low dose Interleukin-6 (IL-6) that has successfully completed Phase I clinical trials and will advance to a pilot efficacy study in patients with chemotherapy-induced peripheral neuropathy (CIPN) during 2020. SON-1010 (IL12-FHAB), Sonnet’s most advanced FHAB-derived compound, utilizes a fully human version of Interleukin-12 (IL-12) linked to FHAB. Sonnet’s first bi-specific candidate, SON-1210 (IL15-FHAB-IL12), combines FHAB with IL-12 and fully human Interleukin-15 (IL-15). Both of these compounds are being developed for solid tumor indications underpinning large commercial market opportunities and are expected to enter Phase I clinical trials during 2020 and 2021, respectively. The discovery pipeline contains two additional bi-specific assets. Upon completion of the Merger, the board of directors of the public company will be comprised of the current members of the board of directors of Sonnet, and Dr. Pankaj Mohan will serve as its Chairman, as well as its President and Chief Executive Officer of the public company.
The Merger Agreement contains customary representations, warranties and covenants made by Chanticleer and Sonnet, including covenants relating to obtaining the requisite approvals of the shareholders of Chanticleer and Sonnet, indemnification of directors and officers and Chanticleer’s and Sonnet’s conduct of their respective businesses between the date of signing of the Merger Agreement and the closing of the transaction.
In connection with the Merger, Chanticleer will prepare and file with the U.S. Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that will contain a prospectus and a proxy statement, and will seek the approval of Chanticleer’s shareholders with respect to certain actions, including the following:
On October 10, 2019, Chanticleer and Sonnet issued a joint press release announcing the execution of the Merger Agreement. A copy of the joint press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
(d) Exhibits
| 2.1 | Agreement and Plan of Merger, by and among Chanticleer Holdings, Inc., Sonnet BioTherapeutics, Inc., and Biosub Inc., dated October 10, 2019.* |
| 99.1 | Joint Press release, dated October 10, 2019. |
* Schedules and exhibits have been omitted to Item 601(b)(2) of Regulation S-K. Chanticleer hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC.
Chanticleer Holdings, Inc. Exhibit
EX-2.1 2 ex2-1.htm Exhibit 2.1 EXECUTION VERSION AGREEMENT AND PLAN OF MERGER by and among CHANTICLEER Holdings,…
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About CHANTICLEER HOLDINGS, INC. (NASDAQ:HOTR)
Chanticleer Holdings, Inc. is engaged in the business of owning, operating and franchising fast casual dining concepts domestically and internationally. The Company’s brands include Hooters, American Burger Company (ABC), BGR: the Burger Joint (BGR), BT’s Burger Joint (BT), Little Big Burger (LBB) and Just Fresh. Hooters restaurants are casual beach-themed establishments featuring music, sports on large flat screens, and a menu that includes seafood, burgers, salads and Hooters original chicken wings. ABC is a fast casual dining chain located in North Carolina, South Carolina and New York. BGR consists of approximately 10 Company-owned locations in the United States and over 13 franchisee-operated locations in the United States and the Middle East. LBB consists of approximately eight locations in Oregon. Just Fresh consists of approximately seven Company owned locations in Charlotte, North Carolina.