MINNEAPOLIS, MN--(Marketwired - Mar 26, 2015) - Groveland Capital, LLC. (the "Groveland Group") announced today that it has filed a letter with the U.S. Securities and Exchange Commission ("SEC"), saying that shareholders of Biglari Holdings Inc. (
The Groveland Group has nominated six independent professionals for the Board of Directors of Biglari Holdings (the "Company" or "BH") and is soliciting votes from fellow Biglari Holdings' shareholders for the election of these individuals at Biglari Holdings' annual meeting, which is scheduled for Thursday, April 9, 2015. The Groveland Group's six highly qualified and experienced nominees include: Nicholas J. Swenson, James W. Stryker, Thomas R. Lujan, Stephen J. Lombardo, III, Ryan P. Buckley and Seth G. Barkett.
Nick Swenson, Principal and Founder of Groveland Capital, stated: "We believe Biglari Holdings has significant potential if corporate governance is reformed and the right operational focus is achieved. We are committed to driving shareholder value for you, our fellow shareholders. We believe the current board has failed BH shareholders in its corporate governance responsibilities. In our view, new board members are needed to check the power of BH's CEO Mr. Biglari and the Company's board."
Added Mr. Swenson, "We are seeking your support to change and reform Biglari Holdings Inc. for the better. We believe BH shareholders are primed for change and deserve a choice. We believe if nothing is done, indications point to continued financial underperformance, continued poor corporate governance, continued wasteful spending and egregious CEO compensation. Change may seem difficult, but the greatest risk to BH shareholders is the status quo."
WE URGE YOU TO CHECK THE POWER OF BIGLARI HOLDINGS CEO MR. SARDAR BIGLARI BY VOTING THE WHITE PROXY CARD.
Key excerpts of today's Groveland Group letter filed with the SEC include:
1. Mr. Biglari's application of conglomerate accounting has made it very difficult for us at the Groveland Group to validate significant claims made by the Company regarding its operating performance. This is critically important because consolidated operating cash flows are declining at a concerning rate. We believe shareholders are at risk of seeing continuing declines in operating performance. Based on the public record, the simple truth is that Mr. Biglari's franchising initiatives have generated significant operating losses for years! And, of course, Maxim's cash burn has been $21.5 million over the first 10.5 months of BH ownership. Repeated references to same-store-sales growth at Steak n Shake are no comfort in the face of these disconcerting and persistent losses.
2. Mr. Biglari seems to steadfastly refuse to respond directly to the operating issues and corporate governance problems that concern shareholders, which we have described in our definitive proxy statement, instead repeating assertions that seem to imply that shareholders have nothing to worry about.
3. Franchising Initiative Is Glamorous Yet Unprofitable
4. Maxim Is Generating Significant Operating Losses
5. Expanding Debt and Shrinking Market Value of Steak n Shake
Enterprise Value (in millions) | 9/29/2010 | 9/28/2011 | 9/26/2012 | 9/25/2013 | 9/24/2014 | 12/31/2014 | |||||||||||||
Market Capitalization | $ | 470.4 | $ | 443.4 | $ | 535.7 | $ | 595.3 | $ | 721.0 | $ | 825.4 | |||||||
Long-term Debt | 17.8 | 101.4 | 120.3 | 110.5 | 215.5 | 214.5 | |||||||||||||
Current Debt | 0.2 | 11.1 | 12.1 | 9.8 | 2.9 | 2.9 | |||||||||||||
Cash | 47.6 | 99.0 | 60.4 | 94.6 | 124.3 | 129.7 | |||||||||||||
Enterprise Value | $ | 440.8 | $ | 457.0 | $ | 607.8 | $ | 620.9 | $ | 815.1 | $ | 913.1 | |||||||
Operating Subsidiaries | |||||||||||||||||||
MAXIM (1) | $ | 15.0 | $ | 15.0 | |||||||||||||||
First Guard (2) | 20.0 | 20.0 | |||||||||||||||||
Western (3) | $ | 23.0 | $ | 23.0 | $ | 23.0 | $ | 23.0 | 23.0 | 23.0 | |||||||||
Total Value of Operating Subsidiaries | $ | 23.0 | $ | 23.0 | $ | 23.0 | $ | 23.0 | $ | 58.0 | $ | 58.0 | |||||||
Investments | |||||||||||||||||||
Investments | $ | 32.5 | $ | 115.3 | $ | 269.9 | $ | 85.5 | $ | 21.5 | $ | 10.8 | |||||||
Investment Partnerships | 23.5 | 18.8 | 25.3 | 397.7 | 557.2 | 698.0 | |||||||||||||
Total Investments | $ | 56.0 | $ | 134.1 | $ | 295.1 | $ | 483.2 | $ | 578.8 | $ | 708.8 | |||||||
Implied Value of Steak n Shake (4) | $ | 361.8 | $ | 299.9 | $ | 289.6 | $ | 114.7 | $ | 178.3 | $ | 146.2 | |||||||
Implied Value of Steak n Shake per share | $ | 252.35 | $ | 209.25 | $ | 202.02 | $ | 66.67 | $ | 86.33 | $ | 70.80 |
Note: | ||
(1) | Maxim is valued at its purchase price of $15.0 million. | |
(2) | First Guard Insurance is valued at its last reported Policyholder Surplus by AMBest. | |
(3) | Western Sizzlin is valued at its purchase price of $23.0 million. | |
(4) | Implied Value of Steak n Shake equals Enterprise Value less Total Value of Operating Subsidiaries less Total Investments | |
Source: Form 10-K filings, Capital IQ, AMBest | ||
6. We Believe The Board Has Failed In Its Corporate Governance Responsibilities
If Groveland Group's director nominees are elected by the shareholders of Biglari Holdings, we plan to expeditiously implement the following KEY INITIATIVES:
1. Immediately appoint Gene Baldwin as interim CEO of Biglari Holdings. Mr. Baldwin has more than 35 years of accounting, finance, senior management and advisory experience. He is a proven business leader with a well-established reputation in the restaurant industry for his ability to assess, develop, and implement operational and financial improvement initiatives that enhance enterprise value for all stakeholders.
2. Review and reduce consolidated SG&A expenses throughout BH; Evaluate global restaurant footprint, real estate values, and lease costs
3. Repair employee and franchisee relations by re-establishing open lines of communication
4. Hire an executive search firm to find a permanent CEO (likely to take 4-6 months)
5. Reform corporate governance policies and procedures
6. Remove "by Biglari" moniker from restaurant signage
7. Assert shareholder rights with respect to BH's investment in the Lion Funds and any shared services agreements between BH and BCC
8. Assert shareholder rights with respect to change of control payments
9. Perform a financial, operational, and strategic review of Maxim, First Guard Insurance and Western Sizzlin
10. Further engage with BH's shareholders to better understand the consensus viewpoint surrounding capital allocation initiatives and strategic options to maximize shareholder value
The entirety of Groveland Group letter, along with other materials related to the Biglari Holdings proxy contest, is available on the website www.ReformBH.com and on the SEC's website www.sec.gov.
VOTE THE WHITE PROXY CARD TO REFORM BIGLARI HOLDINGS.
Your Vote Is Important -- No Matter How Many Or How Few Shares You Own
If you have questions about how to vote your shares, or need additional assistance, please contact the firm assisting us in the solicitation of proxies:
D.F. KING & CO., INC.
Shareholders Call Toll-Free: 877-283-0325
Banks and Brokers May Call Collect: 212-269-5550
REMEMBER:
We urge you NOT to sign any Blue proxy card sent to you by the Company. If you have already done so, you have every right to change your vote by signing, dating and returning the enclosed WHITE proxy card TODAY in the postage-paid envelope provided. If you hold your shares in Street-name, your custodian may also enable voting by telephone or by Internet -- please follow the simple instructions provided on your WHITE proxy card.
About Groveland Capital, LLC
Groveland Capital, LLC. is an Investment Advisor based in Minneapolis, MN. Groveland Capital is nimble advisory focused on unearthing unique investment opportunities. Our insight and global network is complemented by our billion dollar+ fund experience and expertise. Groveland Capital is led by a seasoned team of investment professionals who have continuity, vision and over a decade of experience executing key elements of our investment strategy. Groveland Capital founder and Principal, Nick Swenson, also has significant capital invested in the portfolio, aligning his interests with investors. Our investment strategy is to acquire stakes in undervalued and/or underperforming companies. When necessary, we seek board representation and advocate for improvements in financial performance, capital allocation, and corporate governance for the benefit of all shareholders.
Important Information
The Groveland Group (whose members are identified below) has nominated Nicholas J. Swenson, James W. Stryker, Stephen J. Lombardo III, Thomas R. Lujan, Ryan P. Buckley, and Seth G. Barkett as nominees to the board of directors of Biglari Holdings Inc. (the "Company"), and is soliciting votes for the election of Nicholas J. Swenson, James W. Stryker, Stephen J. Lombardo III, Thomas R. Lujan, Ryan P. Buckley, and Seth G. Barkett as members of the Company's board of directors (the "Groveland Nominees"). The Groveland Group has sent a definitive proxy statement, WHITE proxy card and related proxy materials to shareholders of the Company seeking their support of the Groveland Nominees at the Company's 2015 Annual Meeting of Shareholders. Shareholders are urged to read the definitive proxy statement and WHITE proxy card because they contain important information about the Groveland Group, the Groveland Nominees, the Company and related matters. Shareholders may obtain a free copy of the definitive proxy statement and WHITE proxy card and other documents filed by the Groveland Group with the Securities and Exchange Commission ("SEC") at the SEC's web site at www.sec.gov. The definitive proxy statement and other related SEC documents filed by the Groveland Group with the SEC may also be obtained free of charge from the Groveland Group.
Participants in Solicitation
The "Groveland Group" currently consists of the following persons who are participants in the solicitation from the Company's shareholders of proxies in favor of the Groveland Nominees: Groveland Master Fund Ltd. (formerly known as Groveland Hedged Credit Master Fund Ltd.), Groveland Hedged Credit Fund LLC, Groveland Capital LLC, Nicholas J. Swenson, and Seth G. Barkett. Along with the Groveland Group, the following are also participants in the solicitation: James W. Stryker, Stephen J. Lombardo III, Thomas R. Lujan, and Ryan P. Buckley. The participants may have interests in the solicitation, including as a result of holding shares of the Company's common stock. Information regarding the participants and their interests may be found in the Groveland Group's definitive proxy statement, as filed with the SEC on March 11, 2015. These materials may be accessed from the SEC's website free of charge.
Contact Information:
Contacts
Investors:
Nick Swenson
Groveland Capital
612-843-4302
D.F. King & Co., Inc.
212-269-5550
Media:
Anthony Giombetti
Gio Public Relations
818-821-7530