Shoney's Shareholders' Committee Announces Preliminary Filings With the Securities and Exchange Commission

Jun 16, 1997, 01:00 ET from Shoney's

    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 which under law cannot be repealed by the shareholders.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
 solicitation periods."
     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
 largest shareholder.
     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

SOURCE Shoney's