Three groups of investors acting in concert are proposing to replace the full board of J. Alexander’s Corp., officials of the casual-dining company said Monday.
The investors said in regulatory filings that their effort to place new directors on the J. Alexander's board was motivated by a desire to “assist the company in improving its operational and financial performance.”
The three investor groups — which hold a 12.6-percent collective ownership stake in the restaurant company, which operates 33 locations — are Privet Fund Management LLC, led by Ryan Levenson; JCP Investment Management LLC, led by James Pappas; and Ben Rosenzweig, a lone investor.
In a notice to J. Alexander’s management, a representative of Atlanta-based Privet Fund LP — the investment fund overseen by Levenson and Privet Fund Management — said the restaurant company had dismissed the outside investors’ “efforts at constructive dialogue” during a Jan. 30 phone call.
As a result, the group was availing itself of its rights under the company’s bylaws to nominate directors for the upcoming annual shareholders meeting.
The group’s nominees are Levenson, Pappas, Rosenzweig and Todd Diener, a past president of the Chili’s Grill & Bar and On The Border casual-dining chains.
J. Alexander’s said it was reviewing Privet’s notice for compliance with the company’s governing documents and applicable law.
Lonnie J. Stout II, president and chief executive of J. Alexander’s, said in a statement the Nashville, Tenn.-based company is “always receptive to productive dialogue with our shareholders.” But apart from making their wishes for new board members known, he said the outside investors “failed to discuss with the company any constructive ideas or suggestions about actions the company should or should not take.”
Stout continued, “In addition, we are concerned with Privet’s attempt to take control of the company without paying a full and fair price to all of the company’s shareholders.”
The J. Alexander’s board comprises four highly-qualified and experienced directors, Stout said, three of whom are independent, whom, as a group along with their affiliates, own an aggregate of about 6.4 percent of the company’s outstanding stock.
According to filings with securities regulators, Levenson and affiliated entities beneficially own 9.1 percent of J. Alexander’s Corp.’s common shares; Pappas and affiliated entities own 3.4 percent; and Rosenzweig owns less than 1 percent.
Those filings indicated that Pappas and his affiliated entities acquired all of their shares in J. Alexander’s since Dec. 13 at share prices ranging from $5.83 to $6.65, and that Rosenzweig purchased all of his since Sept. 27 for $6 apiece. J. Alexander’s stock has traded between $5.00 and $7.30 per share over the past 52 weeks.
For the nine months ended Oct. 2, J. Alexander’s Corp. reported net income of $513,000, or 8 cents per share, compared with net income of $2.3 million, or 38 cents a share, for the same 2010 period.
It said net sales totaled $116.3 million, up 5.4 percent from a year earlier, reflecting same-store sales growth of 5.5 percent.