NASHVILLE Tenn. Hedge fund Crescendo Partners, a well-known activist investor, has taken an 8.9-percent stake through its funds and chief executive, Eric Rosenfeld, in the casual-dining operator and franchisor O'Charley's Inc., based here.
While disclosing its stake in a Nov. 15 filing with securities regulators, New York-based Crescendo said that it has no plans to take an activist role in the troubled restaurant company, but it left open the possibility of taking further action, including buying more shares, seeking board seats or pushing for changes in capitalization or ownership.
The nearly 2 million O'Charley's shares that Crescendo purchased were acquired for about $30.1 million.
O'Charley's operates or franchises 363 restaurants under the O'Charley's, Ninety Nine Restaurants and Stoney River Legendary Steaks brands. Like many of its casual-dining peers, O'Charley's has been struggling with slumping sales and traffic.
For the third quarter ended Oct. 7, the company reported a net loss of $400,000, or 2 cents a share, compared with a year-earlier profit of $2.1 million, or 9 cents a share. Its revenues rose about 1 percent to $221 million. The company also lowered its annual per-share earnings outlook, blaming weak same-store sales and a highly competitive environment.
Crescendo and its CEO were active investors in trading card company Topps Co. Inc., which earlier this year agreed to a $385 million private-equity led buyout. Crescendo had garnered a seat on Topps board and was against the deal, which closed in October.