Management is draining cash from the biggest franchisee of McDonald’s Corp., and the restaurant operator should be delisted from the New York Stock Exchange if appropriate, according to a pension adviser.
CTW Investment Group, which advocates for pension funds holding $250 billion, said in a letter filed with the NYSE on Thursday that Arcos Dorados SA’s Chief Executive Officer Woods Staton may be using a company he owns known as Axionlog to drain money from the operator of McDonald’s restaurants in Latin America to the detriment of shareholders.
“The goal is to increase the value of the company and improve corporate governance,” CTW analyst Michael Pryce-Jones said Wednesday in a phone interview. “We want to be sure that there aren’t any self-dealings.”
An Arcos Dorados spokeswoman, Sonia Ruseler, didn’t respond to e-mail or phone messages seeking comment.
CTW estimates that Staton drained about $80 million from Arcos Dorados since 2011, Pryce-Jones said. He added that CTW’s clients own a combined $250,000 of Arcos Dorados and $2.5 million of McDonald’s shares.
Under Arcos Dorados’s share structure, Staton controls 76 percent of the British Virgin Islands-domiciled company’s voting rights while holding 40 percent of outstanding shares, according to the letter.
Arcos Dorados’s shares traded in New York slumped 41 percent in the past year to $5.99. The company posted losses of $109.3 million last year, compared with net income of $53.9 million in 2013.