Landry's Sends Letter To Ark Restaurants Corp. Questioning Motives Of Board
HOUSTON, March 7, 2013
HOUSTON, March 7, 2013 /PRNewswire/ -- Landry's, Inc. ("Landry's") announced
that it has sent a letter to the Board of Directors of Ark Restaurants Corp.
(NASDAQ: ARKR) ("Ark") that calls into question the Ark Board's outright
rejection of Landry's proposal to acquire all of Ark's outstanding capital
stock for $22.00 per share in cash in a negotiated transaction. Landry's
strongly believes that Ark shareholders would experience immediate and far
greater benefit from the significant premium provided byLandry's proposal
than the continued pursuit of Ark's floundering business strategy, which has
produced a 4.6% decline in same store sales and $565,000 in operating losses
related to a particular restaurant in Ark's first fiscal quarter of 2013.
Landry's further believes that the Ark Board, which includes four executive
officers, is more concerned with self-preservation than maximizing value for
shareholders, and called upon the Board to remove the obstacles to Landry's
ability to take its proposal directly to shareholders. A copy of the letter
is set forth below.
March 7, 2013
Via Facsimile and Email
Board of Directors
Ark Restaurants Corp.
85 Fifth Avenue
New York, New York 10003
Dear Members of the Board:
We are writing in response to the press release issued by Ark Restaurants
Corp. ("Ark" or the "Company") on February 14, 2013 publicly announcing that
the Board of Directors of the Company (the "Board") has rejected the proposal
made by Landry's, Inc. ("Landry's") to acquire all the outstanding capital
stock of Ark for $22.00 per share in cash in a negotiated transaction. Ark's
press release stated that the Board rejected our proposal because it was
"inadequate, not compelling and not in the best interests of Ark Restaurants
shareholders" and that "[i]n the board's judgment, Ark's shareholders will be
better served by [the Company's] experienced management operating and growing
[its] business." We are writing to you because, in our view, the Board's curt
and uninformative response runs directly contrary to the best interests of
Ark's shareholders. Our extremely attractive acquisition proposal provides a
significant premium, immediate liquidity and an opportunity to maximize value
for all of Ark's shareholders. In our view, the Board's flat rejection
without evidence of serious consideration or explanation for its decision is
not only puzzling but rather alarming.
Our proposal represents a 22.0% premium to the closing price of the Company's
common stock on February 6, 2013, the date of our proposal, a 28.5% premium to
the average closing price over the 30 days preceding our proposal and a 31.5%
premium to the average closing price over the 90 days preceding our proposal.
We fail to see any support for the Company's assertion that our proposal is
inadequate. In fact, we have no reason to believe the Board has given our
proposal any meaningful consideration since in the three weeks it took to
curtly reject our proposal, we have not at all been contacted by the Board to
discuss it, despite our publicly stated willingness to do so.
It is hard to see how the Board can maintain that the significant premium
provided by our proposal does not value the Company adequately and that
shareholders are better served by the current failed management strategy.
Most recently, Ark has disclosed a 4.6% decrease in same store sales in the
first fiscal quarter of 2013 as compared to the same period in fiscal 2012.
This significant and pervasive decrease in same store sales covers almost all
markets in which the Company operates and includes a 31.6% decrease in
Atlantic City, a 6.1% decrease in Washington DC, a 6.0% decrease in Las Vegas,
a 5.9% decrease in Florida and a 4.4% decrease in Connecticut. In addition,
Ark continues to sustain substantial losses as a result of the
underperformance of its restaurants and restaurant closures. Ark reported
operating losses of $565,000 for the three months ended December 29, 2012
related to a restaurant in New York which opened in March 2012 and which we
believe represents an extremely poor investment of the Company's resources.
Since October 2011, Ark has also permanently closed or vacated a total of five
(5) locations, recording aggregate losses of over $620,000 related to the
closure of these properties. In our view, the Board and management have shown
no ability to reverse this disturbing trend of losses and restaurant
closures. Overall, in light of the serious issues facing the Company, we
continue to believe that our proposal to acquire all of the Company's stock
provides full and fair value to shareholders and is a far better alternative
to the Company's current misguided and poorly executed strategy.
Clearly, shareholders deserve a more thoughtful and substantiated response
than a mere conclusory statement that our proposal is "inadequate". If,
despite the facts we have laid out above, it is indeed the case that the
pursuit of the current strategy of the Company as a standalone business is the
optimal course to deliver value for shareholders, then the Board should have
no problem disclosing its rationale as to why the unconditional rejection of
our attractive proposal in the best interest of shareholders.
Accordingly, we question the Board's motives in rejecting our proposal with no
meaningful dialogue or explanation. We note the staleness of the current
Board, with almost all current directors having served for over a decade.
Further, both Institutional Shareholder Services and Glass Lewis & Co, the two
leading independent proxy advisory firms, have stated in their most recent
reports their significant concern over the lack of independence on the Board.
Four of Ark's executives serve as directors, including its Chief Executive
Officer and Chief Financial Officer. These factors lead us to question
whether Ark's directors are more focused on preserving their long-standing
positions with the Company rather than doing what is best for shareholders.
In our view, it is irresponsible for the Board to deprive the shareholders of
a full and fair review of the value-maximizing transaction we propose, and we
believe that we should have the opportunity to take our proposal directly to
Ark's shareholders. As a New York corporation, Ark is subject to the New York
business combination statute (N.Y. BSC. LAW § 912) which restricts the ability
of shareholders beneficially owning in excess of 20% of the outstanding
capital stock of the Company from engaging in certain business combinations
with the Company for a period of five years. In our view, the Board's
fiduciary duties to its shareholders mandate that the Board immediately take
the necessary steps to approve our acquisition of in excess of 20% of Ark's
outstanding stock or waive the applicability of the New York business
combination statute to the Company, thereby freeing us to take our proposal to
acquire all of Ark's outstanding stock directly to the Company's shareholders
so they can determine for themselves whether it is in their best interests.
Overall, we believe a sensible and appropriate response requires that the
Board either immediately initiate good faith discussions with us regarding our
proposal or immediately take the necessary steps to remove any roadblocks to
our ability to take our proposal directly to shareholders. Any other course
of action is hard to justify in light of the Board's duty to act in
shareholders' best interests.
We continue to firmly believe that a negotiated transaction is in the best
interests of all shareholders. We are fully prepared to immediately engage in
productive discussions regarding our value-maximizing proposal to acquire all
of Ark's outstanding stock at a significant premium. We impress upon you that
your fiduciary duties to the shareholders of the Company mandate that you give
serious and objective consideration to our proposal. We look forward to a
constructive and prompt response from the Board.
The Management of Landry's, Inc.
This press release contains forward-looking statements. Investors are
cautioned that all forward-looking statements involve risks and uncertainty,
including, without limitation, general economic conditions. Although Landry's
believes that the assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could be inaccurate, and therefore, there
cannot be assurance that any forward-looking statements included in this press
release will prove to be accurate. In light of the significant uncertainties
inherent in any forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by Landry's or any
other person that the objectives and plans of Landry's will be achieved.
ABOUT LANDRY'S, INC.: Landry's is a national, diversified restaurant,
hospitality, gaming and entertainment company principally engaged in the
ownership and operation of high end and casual dining restaurants, primarily
under the names of Landry's Seafood House, Rainforest Cafe, McCormick &
Schmick's Seafood Restaurant, The Chart House, Bubba Gump Shrimp Co., Claim
Jumper, Saltgrass Steak House and Oceanaire, and fine dining restaurants such
as Morton's Steakhouse. The Company is also engaged in the ownership and
operation of gaming, hospitality and entertainment businesses, including the
Golden Nugget Hotel & Casinos in Las Vegas and Laughlin, Nevada, and Atlantic
City, the Kemah Boardwalk, the San Luis Resort Complex, and the Downtown
Aquariums in Denver and Houston.
SOURCE Landry's, Inc.
Contact: Rick H. Liem, Executive Vice President & CFO, +1-713-850-1010, or
Steven L. Scheinthal, Executive Vice President & General Counsel,
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