I dare say that every parent, grandparent, aunt and uncle, everyone, has been to a Chuck E. Cheese somewhere in the world.
Chuck E. Cheese will soon be completing a merger with Leo Holding Corp., a blank check company, sometimes referred to as a Special Purpose Acquisition Corporation – (SPAC) which will allow CEC to become a publicly traded company. Upon the completion of this business combination, the new name will be Chuck E Cheese Brands, Inc. and new symbols will be issued for trading.
Leo issued a press release announcing that it has scheduled the extraordinary general meeting of its shareholders to approve the Business Combination for July 30, 2019. However, I caution investors, until this merger is finalized issues can still arise, and until the deal is done, the deal is not done.
Leo Holding Corp. currently trades as LHC on the New York Stock Exchange as do the stock warrants which trade as LHC.WS.
Soon investors will have another restaurant and entertainment company trading which might represent an attractive opportunity depending upon your personal investment objectives.
My fascination and purpose in writing this article is that Leo Holding Corp. has stock warrants trading which will become stock warrants of the new company which may be of interest to many investors.
Currently in our databases, there are 66 blank check companies trading and with each company there is a stock warrant trading which was issued in the initial offering of the blank check company. All of these 66 companies are seeking merger candidates.
The stock warrants have a life of 5 years from the date of the merger which in effect gives holders of the warrants a 5 year call option and a wonderful opportunity to benefit from the upside performance of the company.
The exercise price of these stock warrants is $11.50 and one warrant buys one common share.
While the deal is not yet completed, the current trading price of the common shares is $10.26 and the stock warrants $1.20.
The stock warrants appear to be an interesting way to participate in the growth of Chuck E. Cheese and at a substantially lower entry price of approximately 90% less than buying the common shares and with great upside leverage possibilities. A win-win situation.
Upon the closing of this transaction, new stock and warrant symbols will be issued.
Company Specifics
About CEC Entertainment, Inc.:
“CEC Entertainment. Inc. (“CEC”), headquartered in Irving, Texas, was originally incorporated under the name ShowBiz Pizza Place, Inc. In 1998, the company changed its name to CEC Entertainment, Inc. Today, CEC is the nationally recognized leader in family dining and entertainment with both its Chuck E. Cheese and Peter Piper Pizza venues.
CEC Entertainment, Inc. is the nationally recognized leader in family dining and entertainment with both its Chuck E. Cheese and Peter Piper Pizza venues. As America’s #1 place for birthdays and the place Where A Kid Can Be A Kid®, Chuck E. Cheese’s goal is to create positive, lifelong memories for families through fun, play and delicious handmade pizza. With the first-of-its-kind gaming experience, All You Can Play, kids have access to play every game at Chuck E. Cheese, as many times as they want on any day, without any restrictions. Committed to providing a fun, safe environment, Chuck E. Cheese helps protect families through industry-leading programs such as Kid Check®. As a strong advocate for its local communities, Chuck E. Cheese has donated more than $16 million to schools through its fundraising programs and supports its new national charity partner, Boys and Girls Clubs of America. Peter Piper Pizza features dining, entertainment and carryout with a neighborhood pizzeria feel and “pizza made fresh, families made happy” culture. Peter Piper Pizza takes pride in delivering quality food and fun that reconnects family and friends. With a bold design and contemporary layout, an open kitchen revealing much of their handcrafted food preparation, the latest technology and games, and beer and wine for adults, Peter Piper Pizza restaurants appeal to parents and kids alike. As of December 30, 2018, the Company and its franchisees operated a system of 609 Chuck E. Cheese and 141 Peter Piper Pizza venues, with locations in 47 states and 14 foreign countries and territories. For more information, visit chuckecheese.com and peterpiperpizza.com.”
About Leo Holdings Corp.:
Leo Holdings Corp. is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
Annual Guidance
The Company is again reiterating its annual guidance that was referenced in the investor presentation related to the definitive business combination agreement with Leo, which includes the following:
- Total revenues of $929 million;
- Comparable venue sales growth of 4.2%;
- Adjusted EBITDA(1) of $187 million;
- Four net Peter Piper Pizza openings and 11 net international franchised Chuck E. Cheese openings; and
- Capital expenditures of $95 million to $105 million.
Second Quarter and Year-to-Date 2019 Sales Results Comparable venue sales increased 0.4% in the second quarter of 2019 and increased 4.5% in the first half of 2019. “We generated our fifth consecutive quarter of comparable venue sales growth due to the positive impact of the All You Can Play game packages and More Tickets initiatives and despite the estimated 1.8% negative impact from the shift of Easter and the corresponding timing of Spring Breaks in the second quarter 2019 versus the first quarter 2018.
Through the first half of 2019, our comparable venue sales growth was an impressive 4.5%,” said Tom Leverton, Chief Executive Officer. “Looking ahead, we are re-affirming the annual guidance that we first laid out in April. Our team is doing a solid job of advancing the Chuck E. Cheese brand through planned initiatives while simultaneously further improving the guest experience. We continue to be pleased with the results of our venue re-imaging project and are on track to complete the targeted 60 venue remodels in the back half of this year.” As of June 30, 2019, the Company’s system-wide portfolio consisted of:
Chuck E. Cheese’s Peter Piper Pizza Total
Total Company operated 516 38 554
Domestic franchised 25 61 86
International franchised 68 42 110
Total 609 141 750
Complete financials can be found on the company’s website.
Investors are encouraged to perform your own due diligence and/or seek the advise of your financial advisor before buying any shares are warrants.