Even though they stand to book a paper gain of some 90 percent on their investment in J. Alexander's, the managers of an Atlanta hedge fund are taking to task the independent board members of the restaurant chain with some of the saltiest corporate language we've read in a while.
Reacting to the news Monday that J. Alexander's board has signed an agreement to sell the West End-based chain to Fidelity National Financial for $72 million, Ryan Levenson and Ben Rosenzweig say they are dissatisfied with how things have turned out. In particular, Levenson and Rosenzweig — whose Privet Fund owns 10 percent of J. Alexander's — say the three independent directors of J. Alexander's have not represented other shareholders and that the proposed sale seriously undervalues J. Alexander's.
Per share, the Fidelity National stock-and-cash deal values J. Alexander's at $12, almost double the roughly $6.30 the Privet managers have paid for their stake. But that doesn't mean they're ready to take their gains or approve of getting a stake in Fidelity National's American Blue Ribbon Holdings division.
"No shareholder of J. Alexander's wants a nominal, secondary class interest in an accumulation of businesses that have minimal overlap with the Company's growing market niche and superior brand reputation," Levenson and Rosenzweig said in the letter to Townes Duncan, Brenda Rector and Joe Steakley. "Your belief otherwise bolsters our contention that you are seriously out of touch with the Company's true owners and are unqualified to represent us in any meaningful capacity."
(Disclosure: Duncan is chairman of SouthComm, the parent of NashvillePost.com.)
In equally strong terms, Levenson and Rosenzweig also say the proposed sale to Fidelity National is no more than "a limited outreach to a buyer capable of fulfilling the needs of a desperate and conflicted CEO." That statement builds on an appeal to the independent directors the Privet managers made in early April to assert themselves against Chairman, President and CEO Lonnie Stout.
To read the full letter from the Privet team — who say they will "continue to take all steps appropriate to protect our investment" — click here.