Last year, Live Bitcoin News reported that Fat Brands – a restaurant corporation that owns the popular burger chain Fatburger – was tokenizing a new bond offering with the help of the Ethereum blockchain.
Fat Brands and Ethereum Make Digital Magic Happen
Now, that offering is available in the form of $40 million worth of ETH-based securities. DBRS Morningstar, a company that rates investments, is passing its judgement on the new offering. The sentiment is positive as according to the company’s official report, which says that access to security data is considerably faster and transparency is at an all-time high.
According to Fat Brands CEO and President Andrew Wiederhorn, this could potentially open the doors to further digital securities offerings in the coming months. In an interview, he explains:
It’ll be a transformative event for Fat Brands, and I’m certain that there will be a number of smaller franchise companies or restaurant companies that want to access the whole business securitization market to access capital rather than term loans from lenders.
Payments are already being issued to stockholders via Ethereum through stable currencies and ERC-20 tokens such as $CDG. Payments are also being structured through a New York company called Cadence, which is responsible for recording all the transaction data.
Founder and CEO of Cadence Nelson Chu states:
You’ll see when the money came in, when it went out and how that whole waterfall works. It’s certainly the first rated securitization with a digital asset element, and we’re using it the way it was intended: to provide that level of transparency… What we’re doing is laying the foundation for a future where securitization will be on-chain from start to finish.
Typically, information is submitted first and foremost to Bloomberg, giving people an opportunity to see the trading data through a more traditional sense. Wiederhorn explains:
If you look up on the Bloomberg terminal, for example, who are the holders of the company’s securities, you can tell in two seconds, right? Anybody who’s got a material position in the company, they’re required to file it and list it in this way.
Chu states that while these securities are submitted digitally, they still have paper contracts behind them, which he describes as “crucial” for obtaining new users who are not entirely secure or comfortable with the way the blockchain operates. He explains:
People are getting comfortable with the platform… This takes no adoption from anybody. The ability to click into the contract, see who’s invested, see how much they put money for, how often they transact and for how much, is incredibly valuable.
We’ll Pay Your Fees!
He also states that Cadence covers all Ethereum-based gas fees as a means of ensuring customers can feel easier about getting involved:
We pay for it as a cost of providing that level of transparency that we’re hoping to be the foundation for the future.