Investor discontent has led Benihana Inc. to explore a possible sale and other strategic alternatives, the company said Tuesday.
Despite a renewal program over the past year at its flagship teppanyaki chain and approval of a merger plan to issue new shares, Benihana's chief executive Richard Stockinger said in a statement that “several large shareholders have expressed disagreement with the board and have indicated a desire to seek board membership to pursue a change in the company’s strategic direction.”
Any proxy battle over board seats would likely be considered at Benihana’s Sept. 14 annual meeting.
Stockinger said that while the company was making progress in stemming a sales slide over the past year — all three of the company's brands posted positive same-store sales in the most recent quarter for the first time since 2008 — it needed access to more capital to expand.
“Growth would be predicated on raising additional capital, and the company is reluctant to issue new equity at current price levels,” he said.
Benihana's stock price was up about 8 percent at $6.50 in midday trading Wednesday. The company's shares have traded between $3.44 and $9.55 over the past 52 weeks
In late February, Benihana stockholders gave the company’s management the green light to merge with a subsidiary and issue 12.5 million new shares. The merger was opposed by members of the late Benihana founder Rocky Aoki’s family, which holds about 38 percent of shares in the Benihana of Tokyo trust, and hedge fund Coliseum Capital Management LLC. Both groups said the merger of Benihana Inc. into subsidiary BHI Mergersub and a planned increase in shares would dilute their holdings.
This year has seen an increase restaurant deals. Apollo Global Management LLC this week completed the purchase of CKE Restaurants Inc., parent to the Carl’s Jr. and Hardee’s fast-food chains. Rubio’s Fresh Mexican Grill was sold to private-equity firm Mill Road Capital LP. Luby’s Inc. acquired Magic Brands LLC, parent of the Fuddruckers and Koo Koo Roo brands, in a bankruptcy auction, and Roark Capital Group bought the Wingstop chicken-wing chain. California Pizza Kitchen Inc. also is exploring a possible sale.
Miami-based Benihana Inc. operates 97 restaurants nationwide, including 63 Benihana teppanyaki restaurants, nine Haru sushi unit, and 25 RA Sushi Bars. The company also franchises 21 Benihana units in the United Sates, Latin America and the Caribbean.
Contact Ron Ruggless at [email protected].