Ethereum and FAT Brands Partner Over Digitized Stocks

By October 13, 2019 Ethereum
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Would you have ever thought that cryptocurrency and fast food would go together? Neither did a lot of people, but as it turns out, it’s happening. Through a new partnership with Ethereum and popular burger joint Fatburger…

Fatburger and Ethereum: A Perfect Match?

To be fully clear, it’s not just Fatburger itself, but the corporation that owns it. This corporation owns several restaurants and fast food joints, including Bonanza Steakhouse and Ponderosa Steakhouse. They all exist under the name “FAT Brands,” which is putting $30 million into the Ethereum-based platform Cadence to potentially tokenize a new bond offering.

FAT Brands CEO Andy Wiederhorn explains in an interview:

FAT Brands is working with Cadence as the lead arranger to do a whole business securitization. Similar with other issuances arranged by Cadence, a digital asset will be created that is a digital reflection of ownership for every investor in the structured notes… The FAT Brands securitization will also be a private credit issuance.

For the most part, the company will use fees garnered from its franchises to boost the endeavor. Bonds will start out on paper; they’ll then be tokenized for better security. The company plans to do this with all its bonds by the time 2020 rings in.

Cadence head of capital markets Prath Reddy explains:

There will be security tokens issued on the Ethereum blockchain that digitally represent ownership in the underlying Reg D exempt bonds.

The situation is similar with issuing standard stocks and bonds to shareholders. The only difference is that this time, instead of holding paper-based shares, all investors can expect their property to be digital. The process is allegedly safer and delivers shares faster to potential investors.

Wiederhorn further states that there are likely to be some exemptions that specific investors can look forward to. He says:

It is anticipated that exemptions will be filed for Reg D and Reg S, allowing U.S. accredited investors and international investors to invest in the offerings.

Why Blockchain Matters in These Cases

In closing, he offered additional sentiment regarding blockchain technology and why it’s so important in today’s business dealings:

The digital asset serves as a digital reflection of ownership and provides a level of transparency into the cap table of each structured note, including how much each investor invested. Cadence has already issued 16 different structured notes to date as of the end of August, and so it is likely that investors who have invested in prior Cadence offerings will be investing in this offering as well. By issuing this digital asset, Cadence provides a level of transparency into the cap table that has never existed before.

Among the first companies to try something like this was Overstock, which began issuing stocks to investors via blockchain technology as early as 2015.

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