Good Times Restaurants Inc. (Nasdaq: GTIM) today announced that it has entered into a Stock Purchase Agreement with Small Island Investments Ltd. (“SII”) for the sale of 4,200,000 shares of its common stock for an aggregate purchase price of $2.1 million. SII is a Bermuda corporation based in Boston, Massachusetts. SII is an affiliate of a company that owns and operates three restaurant brands operating in Canada and the United States generating approximately $75 million in revenues.
The closing of the investment transaction under the Purchase Agreement is subject to the receipt of stockholder approval of the transaction and of a reverse split of the common stock to take effect after the closing. On November 1, 2010, SII notified the Company in writing of its successful completion of due diligence and the Company expects the closing to occur by November 30, 2010. Upon the closing, SII will become the beneficial owner of approximately 51.4 percent of the outstanding common stock of the Company. The Company’s financial advisor was Mastodon Ventures who arranged the transaction with SII. A fairness opinion for the transaction was provided to the Board of Directors by Woodville Hall Capital, LLC, of Middleburg, Virginia
President & CEO, Boyd Hoback said, “This capital infusion along with improved operating results provides stability for the Company, resources for longer term growth of Good Times, allows us to regain compliance for our continued Nasdaq Capital Market listing and creates the opportunity to partner with an investment group with deep experience in owning restaurants.”
The Company also reported that its same store sales increased 20.3% in October compared to the prior year, following September’s 7.5% increase. Commenting on the sales increases, Hoback said “We estimate that approximately 10% of the sales increase in October is due to much better weather this year and the other 10% is due to some general improvement in the macroeconomic environment and continued resonance of our internal product and service initiatives for our customers. Since June of 2010 we have seen gradually improving sales trends as we introduced a new lower priced Craver Combo category, two fry alternatives with Fresh Cut Fries and our heritage Wild Fry, Fresh Hand Spun Custard Shakes and other items that are truly unique to Good Times, such as our limited time offer of Sweet Potato Waffle Fries that are available in October through December of this year.”