OSI settles lawsuits, sets buyout vote date

TAMPA Fla. Outback Steakhouse parent OSI Restaurant Partners Inc. disclosed Tuesday that two class-action lawsuits stemming from its pending $3.2-billion going-private buyout have been settled, subject to approval by a Florida court.

The two lawsuits, one filed last November and one in January, alleged that OSI executives and board members colluded with the company's private-equity buyers, Bain Capital Partners LLC and Catterton Management LLC, resulting in an "unfair and inadequate" transaction for OSI shareholders.

OSI "vigorously denied, and continues to vigorously deny, any wrongdoing or liability with respect to all claims asserted in these suits," the company said in its definitive proxy materials filed with federal regulators Tuesday.

The plaintiffs and defendants reached "an agreement in principle," OSI said, providing for the settlement of both suits, subject to court approval and "expressly conditioned" on the majority vote of the outstanding shares of OSI common stock for the proposed buyout. In addition, should the deal not go through and a termination fee becomes due from OSI, both Bain and Catterton agreed to waive a portion of the termination fee, which according to the filing totaled as much as $45 million.

The company, which operates and franchises 1,429 restaurants under eight brands, will hold a shareholder meeting May 8 in Tampa, where the buyout will be voted upon. If approved, shareholders would receive $40 per share. With fees involved, the deal is valued at $3.63 billion.

Also disclosed in the company's proxy material was the initial pairing of Catterton with private-equity firm the Blackstone Group. Those two firms worked together from October 2005 until February 2006 and signed a non-disclosure and standstill agreement with OSI to facilitate due diligence. Catterton and Blackstone told OSI in February 2006 that it would not submit a bid to acquire the company because it was not able to offer more than the company's then share price of $40.78, the proxy materials stated.

In May 2006 Catterton again approached OSI about a possible buyout offer, and said Bain Capital also was interested.

OSI founders, Chris T. Sullivan, Robert D. Basham and J. Timothy Gannon, and certain members of management, including Bill Allen, chief executive; Paul Avery, chief operating officer and interim president of Outback Steakhouse; Joseph Kadow, executive vice president, chief officer-legal and corporate affairs and secretary, and Dirk Montgomery, senior vice president and chief financial officer, are expected to exchange shares of OSI common stock for shares of the new parent company, Kangaroo Holdings Inc., in connection with the merger.

Should the transaction be approved, OSI said its current board of directors would be replaced with a new board nominated by the new parent company, although Sullivan, Basham and Allen will continue to serve as directors.