Figaro’s Owners Turn to Debt to Buy Out the Public as Growth Loses Its Froth

The restaurant group’s operating subsidiary plans to buy out public investors at ₱0.82 a share, taking the company private less than five years after its stock-market debut.

Figaro Culinary Group Inc. is preparing to retreat from the public market as the restaurant operator confronts slower growth, rising costs, and a share price that has struggled to reward investors.

The proposed exit takes an unusual route. Figaro Coffee Systems Inc., or FCSI, the operating subsidiary behind the group’s restaurants, plans to borrow money from China Banking Corporation and use the proceeds to acquire FCG shares held by eligible minority investors.

FCSI is offering ₱0.82 for each publicly held share, excluding those owned by Monde Nissin Corporation, Camerton Inc., and Carmetheus Holdings Inc., as well as qualifying shares held by directors. The buyer will finance the tender offer through a senior secured term-loan facility.

The structure amounts economically to a debt-financed, management-led take-private transaction. The Liu-led controlling group would retain its position, while the operating subsidiary would use borrowed money to remove most of the company’s public minority ownership.

FCG’s board, including its three independent directors, approved the voluntary-delisting application on October 7. A special stockholders’ meeting is scheduled for November 13. FCSI and the existing majority shareholders must collectively own at least 95% of FCG’s outstanding common shares, or another percentage allowed by the Philippine Stock Exchange, for the delisting to proceed.

From Expansion Story to Private Bet

The proposal marks a reversal for a company that entered the stock market in January 2022 and raised about ₱767 million from investors. Less than two years ago, FCG considered another share offering to finance restaurant expansion. It is now proposing to leave the exchange instead.

FCG has grown beyond the coffee shops that gave the group its name. Its restaurant portfolio includes Angel’s Pizza, Figaro Coffee, Tien Ma’s, and Café Portofino, with pizza emerging as a key driver of expansion.

But the breakneck growth that once defined the business has moderated.

Revenue rose just 4.1% to ₱5.67 billion in the fiscal year ended June 2025, a sharp slowdown from 27% growth the previous year and nearly 76% in fiscal 2023. Net income was essentially unchanged at ₱629.6 million, compared with ₱628.4 million a year earlier.

The company returned to faster sales growth during the first nine months of fiscal 2026. Revenue increased 13.5% to ₱4.70 billion through March, while net income rose 5.7% to ₱452.3 million. The disparity was telling: sales grew by double digits, but earnings advanced only modestly as costs absorbed much of the additional revenue.

The March quarter showed much the same pattern. Revenue climbed 14.9% to ₱1.50 billion, but net income increased only about 3% to ₱105.5 million.

FCG’s six-month performance also revealed strain beneath the expansion. Revenue through December 2025 rose 13.1%, but same-store sales fell 4% in the October-to-December quarter. Growth was sustained partly by opening new outlets rather than by generating more business from established locations. Operating expenses increased as the company spent on store support, marketing, and infrastructure.

For a restaurant company, that distinction matters. New stores can keep revenue rising even when customer traffic at mature locations weakens. Expansion produces a larger system, but not necessarily a more productive one.

Borrowing to Buy the Parent

The transaction’s financial engineering is as notable as the proposed delisting.

FCG is the listed parent. FCSI is its operating subsidiary. Yet FCSI will borrow money and use it to acquire shares in the company that owns it. That makes the deal an upstream acquisition, with the subsidiary purchasing shares in its own parent.

The initial disclosure didn’t specify the definitive loan amount, interest rate, repayment schedule, or collateral package. It also didn’t disclose the final number of shares that would be purchased or the maximum cash consideration.

FCG reported 5.47 billion outstanding common shares and a 23.58% public float. If all publicly held shares were eligible and tendered, the gross cost would approach ₱1.06 billion, although the actual amount could be lower because certain director shares and other excluded holdings aren’t covered.

The new borrowing arrives after leverage has already increased. FCG’s total debt stood at roughly ₱1.82 billion as of March 2026, compared with ₱817 million at the end of fiscal 2024. Cash and investments totaled about ₱450 million, leaving the group with net debt of about ₱1.37 billion.

The central question is whether the tender-offer debt will remain ring-fenced at FCSI or ultimately be serviced from the cash generated by the group’s restaurants.

If the operating business bears the cost, money that might otherwise finance stores, equipment or dividends could instead go toward interest and principal payments incurred to buy out public shareholders. The transaction would reduce the number of outside owners, but it wouldn’t add restaurants, develop products or increase customer traffic.

For the Liu group, however, taking FCG private could remove the pressure of quarterly market expectations and give management greater freedom to restructure the business away from public scrutiny. It would also allow the controlling shareholders to capture more of the benefit if slower growth proves temporary and the restaurant portfolio resumes faster expansion.

The Price of an Exit

The ₱0.82 offer represents a 22.4% premium to FCG’s ₱0.67 closing price before the announcement. It is also 9.3% above the company’s ₱0.75 initial public offering price. Investors pushed the shares as high as ₱0.78 when trading resumed, narrowing the gap with the proposed buyout price.

A premium to the last market price can make an exit look generous. But FCG’s thin valuation also raises the question of whether the market price had already discounted its low liquidity, slowing growth and controlling-shareholder structure.

At ₱0.82, the offer values FCG at roughly seven times trailing earnings, according to Abacus Securities. The brokerage said the price appeared low on that measure, though the valuation looked substantially higher when measured by enterprise value relative to earnings before interest, taxes, depreciation and amortization. It described the offer as fairer than some recent delisting proposals while suggesting there could still be room for improvement.

The offer is also 18% below the ₱1 per share that Monde Nissin paid when it acquired a 15% interest in FCG in 2023. Monde’s shares are excluded from the tender offer, meaning the strategic investor isn’t being asked to exit at the lower price offered to public shareholders.

FCG reported book value of approximately ₱0.72 a share as of March 31. The offer therefore represents a relatively modest premium to the company’s last reported accounting equity.

The Missing Final Quarter

Minority investors must also weigh the offer without FCG’s latest audited annual figures.

When the take-private proposal was announced, the latest publicly available financial report covered the nine months ended March 31, 2026. The company’s fiscal year ended June 30, but it hadn't yet released its audited annual report covering the fourth quarter and full fiscal year. FCG’s investor-relations page still listed the March quarterly report as its latest financial filing.

That leaves investors without the latest year-end figures for revenue, earnings, cash flow, debt, and book value as they begin assessing the ₱0.82 offer.

The missing quarter matters because FCG is being taken private amid an uneven operating picture. Revenue growth accelerated during fiscal 2026, but profit growth remained modest. Same-store sales weakened in the December quarter, while store expansion and higher operating expenses kept pressure on earnings.

The audited June results could show whether those pressures intensified or eased during the final quarter.

A Different Kind of Growth Strategy

For years, FCG’s investment case centered on expansion: more pizza stores, broader delivery reach, and a restaurant portfolio extending beyond coffee. The take-private proposal shifts the emphasis from operational growth to ownership consolidation.

The Liu-led group is effectively betting that the business will be easier to manage outside the public market. Minority investors are offered a cash premium to leave, while the operating company takes on debt to finance their exit.

That can reward the remaining owners if earnings accelerate, margins improve, and cash generation comfortably covers the new borrowing. It can become harder if same-store sales remain slow, expansion costs stay elevated, or interest payments compete with the capital needed to grow the restaurant network.

FCG’s public shareholders now face a narrower calculation. They can accept ₱0.82 and surrender their interest in the company’s future, or reject an offer above the recent market price but below the price a strategic investor paid three years earlier.

For the Liu group, the calculation is longer term. It is borrowing to buy greater privacy and a larger claim on whatever growth comes next.

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Disclaimer: This is for informational purposes and is not investment advice. Figures come from company disclosures and exchange data; valuation ratios reflect the author’s calculations based on cited inputs.