Sunday, May 9, 2010

Biglari says, "Don't look at us!"

Biglari Holdings Inc., the corporate alter ego of Sardar Biglari, has announced that it has "absolutely no involvement in Denny's Corporation .... Without our approval, both parties' references to our company, including its subsidiaries, contain misinformation. However, we do not intend to correct any of these errors."

S. Biglari has been chairmnan of the board of Western Sizzlin' Corp. since March 2006, its CEO since May 2007. There is talk that he considers himself a restaurant business deal-maker extraordinaire, and that he could be tempted to make a move on Denny's.

What is simple fact is that Denny's is facing a proxy challenge, and that the challengers have argued: "The weaknesses of Denny's management have forced us to seek changes to the board in the interest of all shareholders. If the status quo is maintained, we are deeply concerned that the Company's future will mirror its past."

RiskMetrics agrees with some of the contentions of the dissidents, writing that in its analysis that Denny's has been a long-term underperformer "compared to IHOP in terms of the restaurant footprint, revenue growth and [same store sales ("SSS")] metrics. Denny's total unit count has declined since the current management took charge in 2001."

The incumbents reply: "Although they profess to want to work with the Board, none of the dissident nominees have ever spoken to the Company or made legitimate efforts to discuss their views or learn about the Company’s strategy and plan."

The dissidents want the company to reduce capiutal expenditues by $10 million. The company charges that in essence they've pulled that number arbitrarily out of their bunghole. (Okay, the filings with the SEC don't exactly put it that way. I'm paraphrasing.)

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