WILBRAHAM Mass. With a dissident stockholder publicly blasting its financial performance, Friendly Ice Cream Corp. said it would explore “strategic alternatives to enhance shareholder value,” language that often presages a sale or refinancing.
The company, whose main business is a namesake, 514-unit family restaurant chain, said it has retained Goldman Sachs & Co. as a financial advisor and Weil, Gotshal & Manges LLP as a legal advisor to assist in the process.
The announcement came a day after Sardar Biglari, who controls 15 percent of Friendly’s shares through his The Lion Fund LP investment arm, sent a letter urging fellow stockholders to put him and an associate, Philip Cooley, on the restaurant company’s board. Biglari and Cooley are directors of Western Sizzlin Corp., the parent of several family oriented steakhouse chains. The letter criticized Friendly chairman Donald Smith and his fellow board members for the company’s negative cash flow, high debt and languishing stock price.Biglari refuted assertions that he’s attempting to take control of the board, but left open that possibility.
Friendly disclosed its plan to explore strategic alternatives after reporting a net income for the fourth quarter of $136,000 on revenues of $122.4 million, compared with a loss of $30 million on revenues of $123.5 million for the same period of the prior fiscal year.
Earlier this month, Biglari reportedly rented billboard ads near Friendly’s headquarters here, asserting that a change in the board would also help employees.
Friendly is a 71-year-old brand whose restaurants are predominantly company-operated. Biglari indicated that he and Cooley would franchise a higher proportion of the chain.
