WILBRAHAM Mass. After running billboard ads near Friendly's headquarters here to enlist the company's employees in his cause, dissident shareholder Sardar Biglari resumed his efforts to gain seats on the family restaurant chain's board through appeals to fellow stockholders. Biglari, who chairs the board of the Western Sizzlin Corp. family steakhouse chain, sent another letter to Friendly shareholders today, imploring them to raise the value of their holdings by voting him and fellow Sizzlin' director Philip Cooley to the northeastern company's board.
In the four-page letter, Biglari said Friendly's parent, Friendly Ice Cream Corp., had been "misgoverned" by current chairman Donald Smith and the present board of directors. Biglari dismissed allegations that he's trying to gain control of Friendly's board as "false," yet left open the possibility if such a change is "warranted and supported by shareholders."
Biglari suggested what strategic directions he would pursue if elected to the board. For instance, "we believe the future of Friendly's [sic] lies in its franchisees." He argued that stepped-up franchising by the once all-company-operated chain would free the home office to focus its resources on the development of better quality products, more effective marketing and better unit-level operations.
Biglari also asserted that Friendly's cash flow has generally been negative since its initial public offering in 1997. He attributed that unsettling situation for shareholders to the company's "enormous" debt, "which is akin to a dagger pointed at the heart of the business."
"Phil and I will strenuously lobby the board to focus on cash flows to raise the intrinsic value of the company," Biglari wrote.
Many of the arguments against maintaining the status quo of the board have been raised before by Biglari, who holds a 15 percent stake in Friendly through his Lion Fund LP investment concern. Friendly's shareholder meeting is scheduled to be held here on May 9.
"After you read this entire letter outlining our philosophy, we urge you to support us," Biglari wrote. "Every vote matters."
Last week, local news media reported that Biglari had rented billboards around Friendly's headquarters. The ads reportedly assert that the board changes sought by the dissidents would be "Good for Employees, Franchisees, Shareholders."
Friendly, based here, operators or franchises 514 restaurants concentrated in the East. Western Sizzlin' operates or franchises about 150 value-priced steakhoues in 21 states under the names Western Sizzlin, Austins, Quincy's, and Great American Steak and Buffet.
