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Activist investor Biglari blasts Steak n Shake board

SAN ANTONIO Activist investor and Western Sizzlin chairman Sardar Biglari criticized what he called Steak n Shake’s "failed vision, failed strategy, failed execution, and failed board" in a letter on Monday to the company’s shareholders.

Biglari, whose San Antonio-based Lion Fund has amassed a 6.7-percent stake in the family-dining chain, also reiterated his intention to seek seats for himself and an associate on the Steak n Shake board.

Calls to Steak n Shake were not returned by press time.

Biglari first sought board seats in August after his investor group bought an initial 5.8-percent stake in the company.

In Monday's letter, Biglari said: "Our aim was to join the board without the distraction of a potentially contentious and expensive proxy fight. However, our efforts to discuss representation with the board have been fruitless. "

Steak n Shake, which operates or franchises 490 units in 20 states, has experienced two years of soft same-store sales. Chief executive Peter Dunn resigned in August after a disappointing third quarter in which Steak n Shake posted a $124,000 net profit, compared with a profit of $7.3 million for the prior third quarter. In the latest quarter, Steak n Shake took a charge of $3.3 million for the planned closing of 14 restaurants.

Not long after Dunn resigned, Steak n Shake said it would evaluate "potential opportunities" through newly appointed financial adviser Merrill Lynch & Co and a special committee of outside directors.

Another investment group that includes HBK Investments LP and Lone Star Steakhouse parent Lone Star Funds disclosed in June that it had purchased a 9.5-percent stake in the company and had plans to seek strategies to maximize shareholder value. 

Biglari said in his letter that he had launched a website,, to communicate his goals for the company with other shareholders. Biglari used a similar tactic when he battled for strategic changes at Friendly Ice Cream Corp., where he secured a 14.9-percent stake in the parent company to the Friendly's chain, and pushed through its eventual sale to private-equity firm Sun Capital Partners. He also now holds a more than 1-percent share in Applebee's International Inc., and said earlier this year that he planned to vote against the proposed $25.50-per-share buyout of Applebee's by IHOP Corp., saying that the bid is too low.

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