The Atlanta hedge fund managers who have pestered J. Alexander's for most of this year have filed suit in Davidson County Chancery Court, saying the company has disenfranchised shareholders and needs to hold its 2012 shareholders' meeting before investors vote on its planned sale to Fidelity National Financial.
Ryan Levenson and Ben Rosenzweig say J. Alexander's should have held its meeting before the end of June but that its leaders changed company bylaws on June 22 to delete that meeting requirement. It is asking the court to order directors to organize a shareholders' meeting "as soon as practical."
"This is necessary so that the Company's shareholders have the chance to exercise their fundamental right to elect independent directors, whose interests are wholly aligned with shareholders," they wrote in the suit. "If elected, such independent directors can then evaluate the Planned Sale to ensure than an appropriate process, free from conflicts of interest, was followed in identifying and evaluating the Planned Sale [...] and that such transaction is the best deal reasonably available for the shareholders."
In their suit, Levenson and Rosenzweig also allege that the go-shop provision J. Alexander's board worked into their sale agreement is "totally inadequate" because it was announced three days after being signed and includes the Fourth of July holiday. As a result, the go-shop period is only 18 full business days, they say.
Eugene Bulso and Steven Nieters of Leader Bulso & Nolan PLC are representing Privet locally. The hedge fund also has contracted with attorneys from Atlanta-based Bryan Cave.
Ryan Levenson and Ben Rosenzweig aren't giving the board of J. Alexander's any respite. Days after filing the proxy statement formally outlining their push to get on the restaurant chain's board, the Privet Fund managers are pushing the company to set the date for its annual meeting of shareholders. A year ago, that meeting took place on May 24, but J. Alexander's hasn't yet filed its papers. The Privet guys say Tennessee law and company bylaws call for all investors to convene by June 30.
As stated before, we stand both ready and willing to explore potential resolutions in order to avoid a potentially costly and distracting proxy contest. However, we will not remain idle as the right of the shareholders to vote on the Company’s future direction is unjustifiably delayed. Should management and the Board believe that a delay provides them the opportunity to search for an interim governance solution, we would caution against any line of insular thinking that minimizes legitimate shareholder concerns.
The Committee to Strengthen J. Alexander's, the investor group calling for big changes at the Nashville-based restaurant chain, has filed its preliminary proxy outlining its platform. The document reiterates many of the things the managers of lead investor Privet Fund have said before, but it also details that Privet entities in the past week and a half snapped up more than 43,000 shares. Those purchases were their first since December. J. Alexander's shares (Ticker: JAX) are up more than 30 percent so far this year.