Guzman y Gomez ponders whether to loan chief executive and founder $45m

Steven Marks, who founded and runs the fast-growing Mexican restaurant empire, could be handed a mega loan as part of his executive remuneration.

Guzman y Gomez aims to have 600 venues, many of them with drive-through access.

Guzman y Gomez, the fast-growing chain of Mexican restaurants, is proposing to loan its own chief executive and co-founder more than $45m to allow him to purchase shares in the company.

Documents filed with the corporate regulator in March and April shows the company is seeking approval from shareholders to provide the mega loan to Steven Marks. It notes Mr Marks may have to wait until GyG has listed to allow him to “dispose of the underlying securities”.

The transaction is part of a new long-term incentive plan for Mr Marks, who would receive 12,365 options in three tranches if shareholders sign off on the plan, the Australian Securities Investments Commission filings show.

The documents were lodged shortly before Magellan Financial on Monday said it would offload its 11.6 per cent stake in the company to Barrenjoey Capital Partners for around $140m.

Guzman y Gomez c-o-founder Steven Marks

Magellan, which has investments in other fast food operators including McDonald’s and Starbucks, acquired the stake for $86.8m early last year. The sale price suggests that Guzman y Gomez is worth about $1.2bn.

Mr Marks, who is on a $972,500 annual compensation package and paid $14m early last year to acquire a home in the exclusive Sydney beachside suburb of Tamarama, could not be reached for comment Monday.

Records show he also controls 30,383 shares and 12,592 options in the group. 

In a statement released by the group, Mr Marks welcomed the profit Magellan was able to make in such a relatively short period of time. “GyG continues to go from strength to strength and we are pleased that Magellan have been able to get a strong return on their investment for their shareholders,’’ he said. 

The company’s chief marketing officer, Lara Thom, did not return a call seeking additional comment about the Magellan move or the pending extraordinary meeting to approve the incentive plan and loans to Mr Marks. It appears that the proposed lending, repayable over seven years, is aimed at enabling Mr Marks to acquire the options. 

“The company intends to imminently enter into a limited recourse loan with (Mr Marks) to fund the option fee and … over the next four years may enter into a further 3 limited recourse loans … to fund the exercise price for each for each of the Tranche 1 Options, Tranche 2 Options and Tranche 3 Options,’’ says the document outlining the extraordinary meeting. 

“The total aggregate loan amount would be $45,277,121.’’ 

A former New York-based short trader for a US-based hedge fund, Mr Marks, 50, grew up eating Mexican food and, after relocating to Australia, launched GyG in inner Sydney in 2006. Since then, it has grown to about 140 outlets across Australia and aims to open about 30 a year for the foreseeable future. The goal is to have 600 venues, many of them with drive-through access.

The group, which also has a foothold in Singapore, Japan and the US, returned to the black in the last financial year with a $4m net profit based on $119.5m in turnover. It had suffered a $7.1m net loss in 2020, records for the holding company show. 

Long-flagged plans for GyG to go public have been postponed several times and Mr Marks recently signalled his continued interest in an eventual ASX listing. 

Records reveal that the company has nearly $81m in paid shares on issue and 10 directors, many of whom have an equity stake in the business. 

Among those serving on the board are Robert Hazan, who co-founded the restaurant group with Mr Marks, and former McDonald’s executives Guy Russo and Steve Jermyn. Also acting as directors are ex-Jetstar boss Bruce Buchanan, former Accent Group chief executive Hilton Brett, Bunning New Zealand managing director Jacquie Coombes and Tom Cowan, who runs global investment group TDM Growth Partners.

In 2021, Athletic Ventures also took a stake in the company. Athletic Ventures is backed by Australian Open champion Dylan Alcott, AFL Brownlow medallist Nat Fyfe and others.