Proxy battle looms for Applebee’s, Breeden

OVERLAND PARK Kan. The war of words between Applebee's International Inc. and its 5-percent stakeholder and disgruntled shareholder, Richard C. Breeden, continued late Thursday when Breeden officially put forth his nominees for Applebee's board of directors, which he said would provide "fresh thinking" and independence to the struggling restaurant company.

Dave Goebel, Applebee's chief executive, responded by reiterating the company's prior offers of two board seats for two of Breeden's nominees and the signing of a confidentiality agreement so that Breeden could observe the work of Applebee's strategy committee, which currently is exploring strategic alternatives for the company, including a possible sale or large recapitalization.

Breeden rejected those offers.

"It is difficult for us to understand why Mr. Breeden, who says he wanted to be a constructive force, would reject these offers in favor of an expensive, time-consuming and distracting proxy fight," Goebel said in a statement.

Breeden filed Thursday proxy materials including his director slate and wishes for Applebee's to reduce expenses, refranchise corporate restaurants and create more value for shareholders.

"Applebee's period of deteriorating operating performance has now entered its fourth year, and as major shareholders we believe it is time for change in the company's direction and in its governance," Breeden said in a statement. "We believe that change must start in the Applebee's boardroom."

Breeden is chairman and chief executive of Breeden Capital Management LLC, a Greenwich, Conn.-based hedge fund that holds a 5-percent stake in Applebee's. He also is a former chairman of the Securities & Exchange Commission. His fund is nominating four members to Applebee's board: Breeden; Steven J. Quamme, a founding partner of Breeden Capital and former franchisee of Blockbuster Video, Boston Chicken and Einstein Bros. Bagels; Raymond G. H. Seitz, former vice chairman of Lehman Brothers; and Laurence E. Harris, counsel to the Washington law firm Patton Boggs LLP.

Applebee's annual meeting is scheduled for May, although a date has yet to be set. The company operates or franchises about 1,942 restaurants.