The Lion Fund Spurns Friendly Ice Cream's (FRN) Offer for One Board Seat
In an amended 13D filing on Friendly Ice Cream Corp. (AMEX: FRN), 14.9% holder The Lion Fund/Sardar Biglari disclosed a letter rejecting the company's recent proposal to offer the firm one seat on the board of directors. The firm had been looking for two seats.
In a letter to the Chairman, Biglari said, "We are disappointed with the actions of the Board of Directors of Friendly Ice Cream Corp. We do not believe the board offer of one board seat encumbered with a number of stipulations and with the obvious objective of diluting our influence is good business, good judgment, or good governance."
Biglari also said, "Friendly's is too important to its shareholders and its community for us not to pursue our two board seats without the handicap of unreasonable restrictions."
A Copy of the Letter:
We are disappointed with the actions of the Board of Directors of FriendlyIce Cream Corp. We do not believe the board offer of one board seat encumbered with a number of stipulations (see Exhibit A) and with the obvious objective of diluting our influence is good business, good judgment, or good governance.
Subsequent to our acquisition of a large position in Friendly Ice CreamCorp.'s common stock, both its bond and stock prices have risen to a level tha treflects the anticipation of change. Any offer that strips us of our rights wemust reject. The restrictions that the offer would impose on us include:
- An attempt to prevent us from engaging in transactions with shareholders without board approval for a period of three years after serving as directors.
- An attempt to require that for three years after serving as directors we support and vote in favor of future proposals - without knowing what they are - which would destroy our independence.
- An attempt to prevent us from supporting other shareholders in opposition to any matter recommended by the board for three years after serving as directors.
- An attempt to limit us to one board seat, which would hamper our ability to foster intelligent discussion on the board by preventing us from getting a second to our motions.
- An attempt to require our resignation if our ownership is reduced below 10% would subject us to a stipulation that does not apply to any other director.
With the proposed restrictions, we would be marginalized as board members,and shareholders will get more of the same - strategies that have destroyed shareholder wealth. No other director has a financial stake in the company as significant as ours, and all have failed thus far in their capacity as stewards of shareholders' capital.
As the largest stockholder, we are not being unreasonable to ask for a minority position on the board, namely two board seats. It is also most unfortunate that the current board would rather cost shareholders more money to fight a proxy battle that we are confident of winning, than having our two nominees on the board. I make that statement not to impress you but rather toimpress upon you that shareholders are voicing their support. Our plan is to help the company, and the cost of this battle, in our judgment, is not as great as the potential losses we all could endure through more board errors of omission and commission.
Dr. Philip L. Cooley - Lion Fund director and Vice Chairman of WesternSizzlin - and I have the experience to serve knowledgeably and judiciously. We would be constructive contributors on the board. Shareholders are intelligent enough to realize that a fresh and sound perspective by financially committed board members is essential after the company's dismal performance under the current board's watch. Friendly's is too important to its shareholders and its community for us not to pursue our two board seats without the handicap of unreasonable restrictions.
We are principled in our pursuit, and we will not waver in our resolve.Sincerely,