Del Frisco’s reaches détente with activist investor Callahan Photography

Del Frisco’s reaches détente with activist investor

Agreement calls for board expansion and Engaged-endorsed director

Del Frisco’s Restaurant Group Inc. reached détente Monday with Engaged Capital LLC in an agreement that expands the casual-dining company’s board and added a director endorsed by the activist investor.

The Irving, Texas-based parent to the Del Frisco’s Double Eagle Steakhouse, Del Frisco’s Grill, Barcelona Wine Bar and Bartaco concepts said it was also terminating a shareholder rights plan it adopted in December after noticing unusual activity in its share trading.

Del Frisco’s said the board agreement with Newport Beach, Calif.-based Engaged Capital, which owns about 9.9 percent of the company’s shares, includes the appointment of activist-endorsed board member Joe Reece, founder and CEO of Helena Capital. He becomes the seventh director on the board.

In return, “Engaged Capital will vote all of its shares in favor of the company’s nominees and other proposals at any meeting of the company’s shareholders during the cooperation period, subject to certain exceptions,” Del Frisco’s said in a statement.

Reece, who will serve until the 2021 annual meeting, will also head the Del Frisco board’s transaction committee, which is overseeing the company’s review of strategic alternatives, including a possible sale of all or part of the company, announced in December.

Ian Carter, Del Frisco’s chair, said in a statement: “We are confident that the insight that Joe will bring in his role as chairman of the transaction committee, and to the board generally, will be invaluable as we move forward with the company’s previously announced review of strategic alternatives.”

Norman Abdallah, Del Frisco’s CEO, added that the company looked forward to its “constructive relationship with Engaged Capital.”

As for the new director, Glenn Welling, Engaged Capital’s founder and chief investment officer, noted that Reece “brings exceptional experience in investment banking and the capital markets to Del Frisco’s, which will be instrumental as the board evaluates the various opportunities available to maximize value for all shareholders.”

Reece currently serves on several other boards and has more than 30 years of experience in finance and investment roles.

For the third quarter ended Sept. 25, Del Frisco’s net loss, with special charges, widened to $67.1 million, or a loss of $2.43 a share, from $1.8 million, or 8 cents a share, in the same period a year ago. Revenues increased 73.7 percent to $105.3 million from $60.6 million in the prior-year quarter.

In early January, Del Frisco’s released preliminary same-store sales for the fourth quarter ended Dec. 25. Systemwide, same-store sales were up 0.2 percent, with a 0.1 percent decline at the Double Eagle, a 0.8 percent decline at Del Frisco’s Grille and increases of 1.9 percent at Barcelona and 1.6 percent at Bartaco.

Del Frisco's Restaurant Group has 73 restaurants across 16 states and Washington, D.C.

Contact Ron Ruggless at [email protected] 

Follow him on Twitter: @RonRuggless

TAGS: Finance
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