Six weeks after Cracker Barrel Old Country Store shareholders voted not to elect an activist investor to that company's board, another locally based restaurant chain faces a proxy contest.
Atlanta-based Privet Fund has told the directors of J. Alexander’s that it has nominated four candidates to the board of the West End-based company. If successful at this spring's shareholders' meeting, the candidates would replace J. Alexander's entire slate of directors.
Privet surfaced late last year after a share buying spree that resulted in a 9 percent stake in J. Alexander's. The fund, led by Vanderbilt graduate Ryan Levenson, has since stepped up its stake to more than 12 percent and recently approached J. Alexander's officials about making governance changes.
In a filing with the Securities and Exchange Commission, Levenson's team wrote that they talked with executives and outside counsel last Monday about moves that would improve J. Alexander's performance. They "expressed the desire of the Privet Parties to work cooperatively and constructively with the Company’s management and Board of Directors" but went hostile after they didn't get the response they wanted from the company.
In addition to Levenson, Privet also is nominating the following:
• Todd Diener, president from 2005 to 2009 of the Chili's Grill & Bar and On the Border concepts under the Brinker's International umbrella.
• James Pappas, a veteran of Goldman Sachs and Bank of America, where he worked on mergers and acquisitions as well as corporate restructurings.
• Ben Rosenzweig
For his part, J. Alexander's Chairman, President and CEO Lonnie Stout said Privet hasn't offered up "any constructive ideas or suggestions" that would boost the company's numbers.
"In addition, we are concerned with Privet’s attempt to take control of the Company without paying a full and fair price to all of the Company’s shareholders," Stout said.
In a statement, Stout pointed out that his three fellow directors are independent under stock exchange rules and "are proven business leaders with a broad range of management, financial, and operational experience, as well as expertise in other areas important to J. Alexander’s business."
Shares of J. Alexander's (Ticker: JAX) haven't reacted much to the news Monday. As of 1:40 p.m., they were up 0.6 percent to $6.72 — about 11 percent above Privet's cost basis. They've climbed about 10 percent in the past three months.