Cites Groveland’s Increasingly Desperate and
Deceptive Tactics and History of Broken Promises
Notes Eleventh Hour Call to Turn Biglari
Holdings into a Pure-play Restaurant Company Runs Counter to
Groveland’s Own Statements and Past Actions
Urges Shareholders to Vote Biglari Holdings’
BLUE Proxy Card Today to Elect
all Biglari Holdings Nominees and Protect Your Investment from
Groveland
Biglari Holdings Inc. (NYSE:BH) (“Biglari Holdings” or the
“Company”) today issued the following statement regarding the
Company’s 2015 Annual Meeting of Shareholders, to be held April 9,
2015. A small hedge fund with only $25 million in assets, Groveland
Capital LLC (“Groveland”), which has disclosed a diminutive
ownership stake in the Company of approximately 0.17%, is
attempting to replace the entire Board of Directors of Biglari
Holdings with a slate of nominees that the Company believes is
wholly unqualified. The alarming and deceptive tactics Groveland
continues to employ for its own benefit should further convince
shareholders that Groveland and its nominees lack any credibility,
and that handing over control of your Company to Groveland would
have disastrous consequences.
The full text of the statement is as follows:
We have repeatedly cautioned our shareholders not to be deceived
by the tactics and misleading claims of Groveland Capital LLC
(“Groveland”), a hedge fund with only $25 million in assets under
management hoping to take over your $1 billion Company with only a
$1 million investment. Groveland has demonstrated a track record of
hypocrisy and willingness to use corporate governance as a
smokescreen to further its own agenda – most notably evidenced
through its actions at nano-cap companies Air T and Pro-Dex.
Groveland’s latest letter to shareholders only confirms our serious
concerns about its ulterior motives and utter lack of
credibility.
Groveland nominated its wholly unqualified slate back in
November 2014 and has, until now, advanced a “plan” for your
Company that ISS, a leading independent proxy advisory firm, states
“lacks sufficient detail and strategic direction.” Now, for the
first time, more than four months later, in its most recent
communication to our shareholders on March 31, 2015, Groveland made
the following statement:
Groveland statement: “Our
desire is to create a pure play restaurant company.”
Shareholders should be staggered by the sheer audacity of this
statement, not to mention its extremely curious timing, coming just
one week before our Annual Meeting. What is particularly striking
is that Groveland has repeatedly pointed to their “success” at
nano-cap companies Air-T and Pro-Dex as examples of why they are
qualified to take control of Biglari Holdings. Yet, they have
historically implemented a conglomerate approach at these
companies, a stark contrast to the “pure-play” strategy they are
suddenly calling for here at such a late stage. Consider this quote
from Seth Barkett of Groveland: “Nick has largely decentralized
AIR-T over the past two years. Air-T is a conglomerate of three operating subsidiaries. Each
has its own CEO and CFO essentially.”
Further, see the below from the Pro Dex Proxy, December 20,
2012:
“When Mr. Swenson met with our Board on December 11, 2011, he
shared with the Board what he described as the investment
hypothesis of his fund, that being to secure large ownership
positions in nano-cap companies with significant cash holdings,
obtain a seat on the Company’s Board, and then exercise influence
over the investment of excess cash into other small companies. Mr.
Swenson compared himself and his model to Warren Buffet [sic],
noting that Mr. Buffet [sic] had used the same approach when he
first obtained control of Berkshire Hathaway and used it as a
vehicle to build it into what it is today.”
To us, these statements demonstrate Groveland’s desperation in
calling for a pure-play structure at Biglari Holdings. Their past
record of taking the opposite course offers clear evidence of the
following:
1.
Groveland has no
actual plan for your Company
2.
Whatever Groveland claims to be its “plan”
should not be believed by shareholders – Groveland will apparently say or do anything to win votes
to take control of your Company
3.
Groveland intends to
tear down all that we have built up for the long-term
benefit of our shareholders
4.
Groveland has once again demonstrated its
true colors, continuing its consistent
pattern of backtracking and flip-flopping that has plagued
shareholders at other companies where Groveland has gained
control
It is clear to us that Mr. Swenson has failed to raise money for
his fund and has failed at building his own diversified company.
Now he is attempting to take control of a successful company. He
has had to consistently flip-flop to try to get your vote. It is
critical that our shareholders do not hand over control of their
Company to Nick Swenson and Groveland. Our shareholders cannot
afford to allow Mr. Swenson and his cohorts to repeat the following
affronts to corporate governance – perpetrated at nano-cap
companies like Air T and Pro-Dex — at our $1 billion
company:
Air T
- Nick Swenson ran a campaign seeking to
remove Air T’s poison pill and separate the Chairman and CEO
- Swenson and two of his other
hand-picked nominees were appointed to the board
- A few short months later, Swenson was
installed as Chairman AND CEO
- After Swenson bought up nearly 29% of
the company, he reinstated the poison pill
Pro-Dex
- Swenson engaged in a proxy contest,
again using his timeworn ploy of criticizing the Company’s
corporate governance practices
- Swenson and his cronies took over
control of the board
- Approximately one year later, Pro-Dex
launched a rights offering – Swenson and one of his running mates
gave themselves the sole right to obtain 100% of the
oversubscription privilege of the rights offering, to the exclusion
of all other shareholders
- Pro-Dex shareholders had no ability to
transfer their rights or to participate in the
oversubscription
- Swenson’s exercise of his
oversubscription rights would have resulted in extreme dilution to
Pro-Dex shareholders at a significant discount
- The only reason his plan did not work
was because Swenson failed to realize that the exercise of his
backstop would jeopardize Pro-Dex’s ability to use its net
operating loss carryforwards
By now, the following should be eminently clear to all of our
shareholders:
Groveland has:
- No Skin in the Game
- No Plan
- Unqualified Nominees
- Ulterior Motives
Do not allow Nick Swenson to get his hands on your Company at
your expense. We urge you to cast your vote on the BLUE
proxy card TODAY to elect all six Biglari Holdings nominees to the
Board to protect and maximize the value of your investment in your
Company.”
If you have any questions, require assistance
with voting your BLUE proxy card, or need additional copies
of the proxy materials, please contact our proxy solicitor:
OKAPI PARTNERS LLC437 Madison Avenue,
28th FloorNew York, NY 10022(212)
297-0720Shareholders Call Toll-Free at: (877)
279-2311E-mail: info@okapipartners.com
About Biglari Holdings Inc.
Biglari Holdings Inc. is a holding company owning subsidiaries
engaged in a number of diverse business activities, including
media, property and casualty insurance, as well as restaurants. The
Company’s largest operating subsidiaries are involved in the
franchising and operating of restaurants. All major operating,
investment, and capital allocation decisions are made for the
Company and its subsidiaries by Sardar Biglari, Chairman and Chief
Executive Officer.
Risks Associated with Forward-Looking Statements
This news release may include “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995 and other federal securities laws. These statements which
may concern anticipated future results are based on current
expectations and are subject to a number of risks and uncertainties
that could cause actual results to differ markedly from those
projected or discussed here. Biglari Holdings cautions readers not
to place undue reliance upon any such forward-looking statements,
for actual results may differ materially from expectations. Biglari
Holdings does not update publicly or revise any forward-looking
statements even if experience or future changes make it clear that
any projected results expressed or implied therein will not be
realized. Further information on the types of factors that could
affect Biglari Holdings and its business can be found in the
company’s filings with the SEC.
Media:Sloane & CompanyElliot Sloane,
212-446-1860esloane@sloanepr.comorDan Zacchei,
212-446-1882dzacchei@sloanepr.com
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