ATLANTA, June 16 /PRNewswire/ -- The Shoney's Shareholders' Committee
announced today that it is making preliminary filings with the Securities and
Exchange Commission with respect to a solicitation of Agent Designations to
call a special meeting of Shoney's shareholders, as well as proxy materials
for the proposed special meeting.
The Shoney's Shareholders' Committee, which is composed of two
shareholders, Raymond D. Schoenbaum and Betty J. Schoenbaum, collectively is
the beneficial owner of 3,866,971 shares or approximately 8.0% of Shoney's
outstanding common stock, and is the second largest shareholder of the
Company. According to Shoney's bylaws and the Tennessee Business Corporation
Act, to call a special meeting requires demands from shareholders representing
at least 10% of Shoney's common stock.
The Committee's members, Raymond D. Schoenbaum and Betty J. Schoenbaum,
are respectively the son and wife of Alex Schoenbaum, who founded Shoney's in
1947 and served as its first Chairman.
At the special meeting, if called, the Committee would, among other
things, seek to:
-- Remove and replace the seven-member Shoney's Board of Directors with
its own slate of nominees.
-- Repeal any and all amendments to the Company's bylaws since February
18, 1996 except for those which were approved by a shareholder vote and those
which under law cannot be repealed by the shareholders.
-- Amend the bylaws to fix the number of directors at seven, and to
prohibit any change in the size of the Board without shareholder approval.
Raymond D. Schoenbaum and Betty J. Schoenbaum jointly commented, "As
stated in our recent 13D filings and in a letter to the Shoney's Board, we
have been disappointed with Shoney's operating performance and stock price in
recent years. Shoney's share value dropped nearly 80% in the period from
October 29, 1993 to April 25, 1997 (the date on which we filed our first 13D
indicating that we were exploring our options regarding our investment in
Shoney's) -- a period in which the S&P 500 and the S&P Restaurants Index
respectively increased 63.6% and 66.8%." "We believe," they continued, "this
astonishing loss of shareholder value is directly related to the deterioration
of the quality of many Shoney's restaurants and Shoney's overall reputation in
the marketplace, for which the current Board and management must accept
responsibility. As the son and wife of Alex Schoenbaum, Shoney's founder, we
regard Shoney's as a legacy of our family and its struggles in recent years
have been personally very distressing to us."
Raymond D. Schoenbaum and Betty J. Schoenbaum concluded, "After
considering various alternatives, we have decided that the best way to restore
the lost focus of Shoney's is to seek to replace the Board at the proposed
special meeting. We look forward to discussing our ideas for improving
Shoney's operations, reputation and share value during our upcoming
Raymond D. Schoenbaum has been actively involved in the restaurant
industry since 1974, and he has extensive experience in the business,
including substantial experience in the full service dining industry and in
the quality fast food market. From 1974 to 1985, Raymond D. Schoenbaum
successfully grew a Wendy's franchisee (Restaurants Systems, Inc.) to in
excess of 30 stores which he sold to Wendy's in 1985 for approximately
$40 million. Between 1985 and 1995 he developed and operated Ray's on the
River and Rio Bravo, a successful chain of casual restaurants. In 1995,
Raymond D. Schoenbaum sold Ray's on the River and Rio Bravo to Applebee's
International Inc. for approximately $70 million, and became a director of
Applebee's following the sale. In addition, Raymond D. Schoenbaum has been
involved with the turnaround of companies in the restaurant and restaurant
services industries, including Squirrel Companies, Inc., a manufacturer of
restaurant point-of-source computer equipment, as the former chairman of the
board, and Max & Erma's Restaurants, Inc., as a former member of the board and
The Committee expects to mail its BLUE Agent Designation cards and related
solicitation statements to all Shoney's shareholders in early July 1997.
Following is the complete text of a letter sent today from Raymond D.
Schoenbaum, to the Board of Directors of Shoney's, Inc.:
June 16, 1997
Board of Directors of Shoney's, Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
Re: Meeting of the Shoney's, Inc. Board of Directors
Ladies and Gentlemen:
My mother and I were surprised and disappointed by your letter in which
you rejected our request to address the Board at its two-day retreat in mid-
June to discuss Shoney's current situation and possible alternatives for
resolving Shoney's problems. We found it disturbing that you refused to meet
with a representative of shareholders holding approximately 8% of Shoney's
stock, particularly one who is interested in working with, and has the
experience to help, the Board in addressing Shoney's problems.
We also were surprised by the Board's suggestion that we submit our
proposals in writing after which the Board would "consider a time in the
future" for us to meet with the Board "or a committee of the Board." We
believe that this statement demonstrates a lack of understanding of the
urgency of Shoney's situation and the lack of leadership under the current
management. We had expected that, in order to address Shoney's current
problems, the Board would be interested in obtaining as much information and
as many ideas as soon as possible. Instead, rather than taking a small amount
of time during the Board's two-day retreat to discuss our concerns, the
Board's response appears designed only to delay our requested meeting to
discuss with you the crucial issues facing Shoney's.
As we stated in our June 2 letter, we continue to believe that Shoney's is
at a critical juncture. We, as Shoney's shareholders, have endured many years
of poor financial performance. Over the last several years, Shoney's
shareholders have provided you with time and have patiently given you the
opportunity to revitalize Shoney's. The result of this patience has been a
substantial erosion in the stock price. Despite this record, the Board
continues to state that it has the "proper business strategy and management
team." After two years under the current management, however, Shoney's
condition has not only failed to improve, but, in fact, has deteriorated. As
a result, we believe that Shoney's shareholders no longer have the "time", nor
should we be asked to have the "patience", that you request.
Because of Shoney's continued poor performance and the Board's refusal to
meet with me at the June Board meeting despite the urgency of the present
situation, we feel that we are left with no alternative but to present our
case directly to the shareholders. We have filed documents today with
Shoney's and with the SEC for the purpose of calling a special meeting to
remove the current members of the Board and replace them with our nominees,
who would intend to put in place a new management team committed to addressing
Shoney's condition with the urgency it requires.
We believe Shoney's is running out of time and that its long-term
viability is threatened. We need to take decisive action now to ensure the
long-term survival of the company for the benefit of its shareholders.
/s/ Raymond D. Schoenbaum
Raymond D. Schoenbaum