Acquisition of 99 Restaurants Provides Unique
Opportunity for Growth
J. Alexander’s Holdings, Inc. (NYSE: JAX) (“J. Alexander’s”)
today issued an open letter to its shareholders in connection with
J. Alexander’s previously announced acquisition of Ninety Nine
Restaurant & Pub (“99 Restaurants”) described in its proxy
statement dated December 21, 2017.
This press release features multimedia. View
the full release here:
http://www.businesswire.com/news/home/20180116005751/en/
See pages 60-64 of the proxy statement
for information concerning the use of projections, and the use of
non-GAAP financial measures Revenue and Adjusted EBITDA, as well as
a reconciliation of projected Adjusted EBITDA to projected net
income. (Graphic: Business Wire)
J. ALEXANDER’S BOARD RECOMMENDS THAT
SHAREHOLDERS VOTE “FOR” THIS TRANSACTION ON THE WHITE PROXY
CARD.
Dear Fellow Shareholder:
Your Board and management have worked diligently to identify and
execute opportunities to drive growth and value for your shares and
we are confident that the proposed transaction with 99 Restaurants
represents a significant opportunity to do so.
99 Restaurants
Continues its Solid Performance
Recently, Cannae Holdings, Inc. (NYSE: CNNE), the majority owner
and operator of 99 Restaurants, provided preliminary sales results
for the fourth quarter and fiscal year ended December 31, 2017
relative to 99 Restaurants. These results confirmed our high regard
for 99 Restaurants and its management. The business continues to
deliver consistent, quality financial results, which help to make
it unique in the $15 to $20 check average bar and grill segment.
These results are driven by:
- Best in class operations, with
complementary philosophies to J. Alexander’s in terms of its
approach to guests and management style
- A stable and experienced management
team, with long-tenured hourly employees
- A long-standing presence in the
Northeast, with significant guest loyalty and strong ties to local
communities built by its emphasis on good food for a fair
price.
The combination with 99 Restaurants will not only allow the
Company to achieve more rapid growth, but will also help to
increase its scale of operations and better support public company
and management costs.
This Transaction Will
Drive Significant Value
The acquisition will create attractive value for your investment
now and in the future. The combination is expected to help J.
Alexander’s achieve significant revenue and earnings growth that it
would not be able to achieve on a stand-alone basis. In addition,
synergies realized through the combination of back-office
operations are expected to create additional value.
The projected financial information reflected above was reviewed
by our Board and reflects compound annual
revenue growth of 6.4 percent and compound annual
Adjusted EBITDA growth of 10.5 percent through
20211.
These projections are considered achievable and reflect
conservative assumptions on same store sales and modest increase in
payroll and benefits expenses. Potential synergies could reach
approximately $1.5 million to $2 million in annual positive impact
on pre-tax income.
J. Alexander’s Board
Secured Key Improvements in the Acquisition Proposal
Over the course of the negotiations, your Board of Directors was
able to achieve a number of improvements to the terms of the
acquisition proposal, which included:
- A lower valuation for 99
Restaurants and a premium valuation for J. Alexander’s
stock,
- Termination of the consulting
agreement with Black Knight Advisory Services,
- Only one additional Board
member, in William P. Foley, II,
- A “fiduciary out,” or the right of the
Company to terminate the Merger Agreement in certain
circumstances, including a superior proposal from a third
party for a transaction with the Company; and
- A disinterested shareholder
vote, which requires that, in addition to any required
approvals under applicable law, the transaction is also being
submitted for approval by the disinterested shareholders of the
Company.
In short, the Company will continue to benefit from the
expertise of Mr. Foley without any consulting agreement, and is
allowed to terminate the Merger Agreement if any third party makes
a superior offer.
Importantly, the Company is aware this is a transaction
involving conflicts of interest and, accordingly, specifically
negotiated that the transaction will only proceed if disinterested
shareholders vote in favor of it.
The J. Alexander’s Board of Directors believes this transaction
will create attractive value for, and is in the best interest of,
all shareholders, for reasons including:
- The transaction is expected to be
accretive to J. Alexander’s earnings per share.
- The acquisition presents opportunities
for synergies and management estimates that potential synergies
could have an annual positive impact on pre-tax income of $1.5
million to $2.0 million.
- The combination with 99 Restaurants
will help J. Alexander’s achieve more rapid growth and increase the
scale of operations.
J. ALEXANDER’S BOARD
RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THIS TRANSACTION ON THE
WHITE PROXY CARD BEFORE JANUARY 30, 2018.
Sincerely,
The J. Alexander’s Board of Directors
About J. Alexander’s
J. Alexander’s Holdings, Inc. is a collection of boutique
restaurants that focus on providing high quality food, outstanding
professional service and an attractive ambiance. The company
presently owns and operates the following concepts: J. Alexander’s,
Redlands Grill, Stoney River Steakhouse and Grill and Lyndhurst
Grill. J. Alexander’s Holdings, Inc. has its headquarters in
Nashville, Tennessee. To learn more about J. Alexander’s, please
visit www.jalexandersholdings.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
In connection with the safe harbor established under the Private
Securities Litigation Reform Act of 1995, J. Alexander’s Holdings,
Inc. (the “Company,” “J. Alexander’s” or “JAX”) cautions that
certain information contained or incorporated by reference in this
document and its filings with the Securities and Exchange
Commission (the “SEC”), in its press releases and in statements
made by or with the approval of authorized personnel is
forward-looking information that involves risks, uncertainties and
other factors that could cause actual results to differ materially
from those expressed or implied by the forward-looking statements
contained herein. Forward-looking statements discuss the Company’s
current expectations and projections relating to our financial
condition, results of operations, plans, objectives, future
performance and business. Forward-looking statements are typically
identified by words or phrases such as “may,” “will,” “would,”
“can,” “should,” “likely,” “anticipate,” “potential,” “estimate,”
“pro forma,” “continue,” “expect,” “project,” “intend,” “seek,”
“plan,” “believe,” “target,” “outlook,” “forecast,” the negatives
thereof and other words and terms of similar meaning in connection
with any discussion of the timing or nature of future operating or
financial performance or other events. Forward-looking statements
include all statements that do not relate solely to historical or
current facts, including statements regarding the Company’s
expectations, intentions or strategies and regarding the future.
The Company disclaims any intent or obligation to update these
forward-looking statements.
Important factors that could cause actual results to differ
materially from those expressed or implied by the forward-looking
statements include, among other things: the fact that certain
directors and executive officers of the Company and 99 Restaurants,
LLC (“99 Restaurants”) may have interests in the transactions that
are different from, or in addition to, the interests of the
Company’s shareholders generally; uncertainties as to whether the
requisite approvals of the Company’s shareholders will be obtained;
the risk of shareholder litigation in connection with the
transactions and any related significant costs of defense,
indemnification and liability; the possibility that competing
offers will be made; the possibility that various closing
conditions for the transactions may not be satisfied or waived; the
occurrence of any event, change or other circumstances that could
give rise to the termination of the merger agreement, including
circumstances that may give rise to the payment of a termination
fee by the Company; the effects of disruptions to respective
business operations of the Company or 99 Restaurants resulting from
the transactions, including the ability of the combined company to
retain and hire key personnel and maintain relationships with
suppliers and other business partners; the risks associated with
the future performance of the business of 99 Restaurants; the risks
of integration of the business of 99 Restaurants and the
possibility that costs or difficulties related to such integration
of the business of 99 Restaurants will be greater than expected;
the risk that the Company may not be able to obtain borrowing
pursuant to an amendment of its existing credit facility on
favorable terms, or at all, in order to repay the debt assumed in
connection with the consummation of the transactions; the
possibility that the anticipated benefits and synergies from the
proposed transactions cannot be fully realized or may take longer
to realize than expected; the fact that the Company has incurred
and will continue to incur substantial transaction-related costs;
and the fact that the transactions will dilute the Company’s
economic interest in certain operating subsidiaries of the Company,
and any increase in total revenue, income and cash flows of such
operating subsidiaries as a result of the transactions may not
outweigh such dilution. Further, the business of 99 Restaurants and
the business of the Company remain subject to a number of general
risks and other factors that may cause actual results to differ
materially. There can be no assurance that the proposed
transactions will in fact be consummated.
Additional information about these and other material factors or
assumptions underlying such forward looking statements are set
forth in the reports that the Company files from time to time with
the SEC, including those items listed under the “Risk Factors”
heading in Item 1.A of the Company’s Annual Report on Form 10-K for
the year ended January 1, 2017, and in its subsequent Quarterly
Reports on Form 10-Q, including for the quarters ended October 1,
2017, July 2, 2017, and April 2, 2017. The foregoing list of risk
factors is not exhaustive. These risks, as well as other risks
associated with the contemplated transactions, are more fully
discussed in the definitive proxy statement filed with the SEC on
December 21, 2017. These forward-looking statements reflect the
Company’s expectations as of the date of the information as stated
in the proxy statement. The Company disclaims any intent or
obligation to update these forward-looking statements for any
reason, even if new information becomes available or other events
occur in the future, except as may be required by law.
The Company cautions shareholders and other interested parties
that certain statements and assumptions included in this document
include, make reference to, or otherwise rely on historical results
of financial operations and projected financial information of 99
Restaurants as reported to us by 99 Restaurant’s management team
without our independent verification.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, the Company has filed
with the SEC a definitive proxy statement on Schedule 14A on
December 21, 2017, which has been mailed to the Company’s
shareholders on or about December 22, 2017. SHAREHOLDERS OF THE
COMPANY ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND
ACCOMPANYING WHITE PROXY CARD REGARDING THE PROPOSED MERGER AND ANY
OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. Investors and security holders may
obtain a free copy of the proxy statement and other filings
containing information about the Company at the SEC’s website at
www.sec.gov. The definitive proxy statement and the other filings
may also be obtained free of charge at the Company’s “Investor
Relations” website at investor.jalexandersholdings.com under the
tab “More” and then under the tab “SEC Filings.”
PARTICIPANTS IN THE SOLICITATION
The Company and certain of its respective directors and
executive officers, under the SEC’s rules, may be deemed to be
participants in the solicitation of proxies of the Company’s
shareholders in connection with the proposed merger. Information
about the directors and executive officers of the Company and their
ownership of Company common stock is set forth in the proxy
statement for the Company’s 2017 annual meeting of shareholders, as
filed with the SEC on Schedule 14A on April 11, 2017, and the
definitive proxy statement for the Company’s meeting of
shareholders to vote on the proposed merger, as filed with the SEC
on December 21, 2017. Additional information regarding the
interests of those participants and other persons who may be deemed
participants in the transactions are included in the
above-referenced definitive proxy statement regarding the proposed
merger. Free copies of these documents may be obtained as described
in the preceding paragraph.
1 These projections are presented in the proxy statement and are
subject to assumptions, definitions, and explanations in the proxy
statement. The projected financial information does not constitute
earnings guidance for 2018 or other periods.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180116005751/en/
J. Alexander’s Holdings, Inc.Mark A. Parkey, 615-269-1900orSard
Verbinnen & CoPatrick Scanlan/Danya Al-Qattan, 212-687-8080
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