Lion Fund Wants Two Scoops Of Friendly’s Board

Dec 8 2006 | 4:58pm ET

Sardar Biglari, founder of activist hedge fund firm Biglari Capital Corp, has an appetite for Friendly Ice Cream Corporation. On Dec. 4, Biglari, who owns approximately 15% of the outstanding common stock of the company, sent a letter to Friendly’s shareholders clamoring for two seats on the company’s board of directors.

Biglari intends to attend Friendly’s next shareholder meeting on May 9, whereby he will nominate himself and Philip Cooley, a director of The Lion Fund, to the company’s board.

In his letter to shareholders, Biglari states: "We are taking the proactive approach because we believe it is time for change at Friendly's and we see opportunities -- set in motion by sound change -- to create tremendous value. Our concerns over Friendly’s arise from its poor corporate governance, poor operational performance, poor stock performance, and its weak balance sheet…Friendly’s must make better capital allocation decisions and improve its capital structure if it is going to survive and then thrive."

Biglari is the current chairman of the board of Western Sizzlin Corporation, a steak and buffet restaurant chain, which appointed him as chairman and accepted the resignation of six former directors in March 21 of this year.

On Dec. 6, Friendly’s said it intends to increase the size of its board of directors from five to seven with its board having decided to offer one of the two additional seats on the board to Biglari.

The company stated: “…it is in the best interests of the shareholders to make Mr. Biglari this offer to avoid a potentially contentious and expensive proxy fight at a time when the company is actively pursuing key initiatives to improve shareholder value. In the event that Mr. Biglari rejects the offer, the Board intends to fill both seats with highly qualified candidates selected by the Board.”

Biglari could not be reached for comments before press time.

Friendly Ice Cream Corporation is a restaurant company serving sandwiches, entrees and ice cream desserts in over 520 company and franchised restaurants throughout the Northeast. The Company also manufactures ice cream, which is distributed through more than 4,500 supermarkets and other retail locations.


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