MIAMI, Aug. 19, 2011 /PRNewswire/ -- Benihana Inc.
(NASDAQ: BNHN; BNHNA), operator of the nation's largest chain of
Japanese theme and sushi restaurants, today sent a letter to
stockholders urging them to vote in favor of the proposal to
reclassify each share of the Company's Class A Common Stock into
one share of Common Stock.
The full text of the letter is as follows:
August 19, 2011
Dear fellow Benihana stockholders:
Our turnaround strategy for creating profitable growth and
sustainable stockholder value at Benihana is working. I am pleased
to report to you that, as a result of the continued execution of
our Renewal Program, we have experienced 19 consecutive periods of
comparable store sales growth and six consecutive quarters of
revenue growth. We have translated this strong sales performance
into solid financial results, generating solid cash flow which has
enabled us to reduce borrowings under our line of credit from a
high of $35.2 million as of
November 9, 2009, to no borrowings as
of August 15, 2011. And on a
year-over-year basis through August 17,
2011, we have generated over 12% return for our
stockholders. This demonstrates the dramatic turnaround that
Benihana has undergone under the leadership of the talented and
experienced management team that your Board recruited in 2009.
Today, your Company has a tremendous portfolio of brands that
are uniquely positioned, and the success of our Renewal Program
continues to drive positive momentum at Teppanyaki, an iconic,
category defining brand. In addition, the industry environment
plays well to all three of our brand propositions – Benihana, RA
Sushi, and Haru – and we are an industry leader in comparable store
sales. We believe we are now well equipped to take full advantage
of our position and realize opportunities for new unit development.
DO NOT ALLOW OUR PROGRESS TO BE JEOPARDIZED
PLEASE VOTE THE ENCLOSED WHITE PROXY CARD TODAY
TO ENSURE YOUR COMPANY CAN CONTINUE TO REALIZE ITS POTENTIAL
VALUE
Stockholders have a simple choice:
Enable the Company to continue its significant progress by
taking steps that your Board believes are in the best interests of
all stockholders and would create stockholder value, or
support Benihana of Tokyo, Inc.
(BOT) in protecting its 26.7% voting position.
We believe our dual-class common stock structure has been an
overhang on the Company's stock price. That is why we are asking
for your support for a reclassification that aligns economic and
voting interests and will help address concerns about liquidity of
stock. As a critical component of our strategy going forward, we
are seeking approval to reclassify each share of Class A Common
Stock into one share of Common Stock. If the reclassification
proposal is approved, then the Company's stockholder rights plan
will be eliminated effective upon the implementation of the
reclassification.
The proposed reclassification is in the best interest of ALL
stockholders
We are confident that these changes will improve and simplify
the Company's capital structure, while offering several
benefits:
- Adoption of a corporate governance "best practice." Proxy
advisory service ISS supports 'one-share, one-vote' voting
structure at publicly traded companies (ISS Report on Aaron's Inc.,
11/17/2010.)
- Improved liquidity and enhanced quality of trade execution by
aggregating the volume of common shares traded and allowing
investors to buy and sell larger positions with less impact on the
stock price. In fact, the mean and median of the change in average
daily trading volume for selected reclassifications reviewed by the
Company's independent financial advisers a year after the companies
reclassified reflected an increase in trading volume.
- Alignment of voting rights with economic ownership. By
eliminating the disparity between voting rights, including the
current right of Class A Common Stock holders to elect 25% of the
Board (voting as a separate class), the reclassification may make
our Common Stock a more attractive investment.
- Increased attractiveness to institutional investors. The
reclassification will address complexity and liquidity concerns of
institutional investors and will allow our Common Stock to be held
by certain institutional investors whose policies do not permit
investments in dual-class companies.
- Improved transparency and elimination of investor confusion.
The reclassification will simplify the Company's capital structure
and eliminate potential investor confusion as to the calculation of
the Company's total market capitalization, shares outstanding, and
earnings-per-share.
- Increased flexibility for future strategic opportunities. The
simplified structure could provide increased flexibility to
structure acquisitions and equity financing by using equity as
acquisition currency, and for possible future offerings of capital
stock to potential investors.
VOTING THE WHITE PROXY CARD WILL ENABLE THE
COMPANY TO UNLOCK VALUE FOR STOCKHOLDERS
It is unfortunate that BOT has attempted to distract
stockholders from this important question by raising meritless
issues and allegations against one of our shareholders, BFC
Financial Corp.
This is part of a well-worn pattern: over a period of years, BOT
has consistently opposed the Company's proposals. Their past
opposition has been without merit and proven to be unfounded. The
Company has been making strong progress and delivering against its
operational plan.
The facts, however, are clear…and contradict each of BOT's
stated claims:
On BFC's role at Benihana
Facts:
- BFC's voting stake will be diluted by the reclassification, and
yet it voted in favor of the proposal.
- The Series B Preferred shares have no veto over strategy,
day-to-day operations or matters other than customary public
preferred stock veto rights over fundamental corporate changes.
- BOT's attempt to impugn BFC's portfolio simply ignores BNHN's
business progress and stock price appreciation as the Renewal Plan
under this leadership has gained momentum.
On a dual class structure still existing
post-reclassification.
Facts:
- The Series B Preferred Stock does not publicly trade and is
treated as a convertible debt instrument for accounting purposes.
In addition, the Series B Preferred Stock generally has the same
voting rights as common stock – eliminating voting power
disparities among stockholders.
On liquidity issues likely still remaining
post-reclassification and an investor relations effort having the
ability to better address this problem.
Facts:
- The mean and median of the change in average daily trading
volume for selected reclassifications reviewed by the Company's
independent financial advisers a year after the companies
reclassified reflected an increase in trading volume.
- Additionally, Benihana has already launched an aggressive IR
program including meetings with sell-side analysts, conference
calls with the financial community to review earnings, and
scheduled conference presentations. The Company also recently
announced the hiring of an experienced CFO with significant IR
experience in the restaurant industry to assist in driving these
efforts.
On the Company's grant of Class A Common Stock to executive
officers in the past six months.
Facts:
- The grants of restricted stock to management equal only 3.7%
(approximately) of total shares outstanding as of August 17, 2011, reflecting levels below the
industry standard, and the majority of these restricted stock
grants are linked to performance and include restricted stock that
vests at a share price of up to $20.
These grants do not include awards made to executives hired on or
after August 15, 2011, although any
such awards will be granted under the existing Equity Plan, and,
taken together with the existing restricted stock grants to
management will continue to represent a low proportion to total
shares outstanding, compared to the industry standard.
On the process for approving the reclassification and BFC's
role in the process.
Facts:
- The reclassification proposal was voted upon by the entire
Board, including those directors nominated by BOT. None of the
directors voted against the recommendation.
- Additionally, an independent financial adviser was engaged for
the purpose of evaluating the proposal.
- BFC will have its total voting power diluted through the
reclassification from 19.6% to 9% and is committed to voting in
favor.
- Finally, Coliseum, the only significant stockholder on the
Board whose voting power would increase as a result of the
proposal, abstained from voting.
On the Company supposedly choosing to move the record date to
accommodate stockholders.
Facts:
- The change to the Special Meeting date and thus the record date
was wholly the direct result of the length of time involved in the
process of clearing the Registration Statement through the
SEC.
On the need for a Special Meeting given proximity to this
year's Annual Meeting.
Facts:
- The potential for stockholder confusion grows significantly if
stockholders are asked to vote on the reclassification at the same
time as also voting on potential director nominees for two
different scenarios – depending on whether the reclassification is
successful. The Special Meeting confers no advantage or
disadvantage to the Company or any particular stockholder in terms
of vote.
YOUR VOTE IS IMPORTANT – YOUR COMPANY'S CONTINUED MOMENTUM
DEPENDS ON IT
Benihana's significant operational progress reflects the
strength of the Board in taking decisive actions to strategically
improve our franchise. As we continue to drive our business forward
through new initiatives, we remain continuously focused on
enhancing value for our stockholders. It is therefore extremely
important to your Company's continued progress that stockholders
send an unambiguous signal of support for a proposal that will
simplify the capital structure, improve transparency and liquidity,
increase flexibility to pursue strategic opportunities, and
strengthen corporate governance.
We are succeeding in the marketplace – in August, your Company
announced sales for the first four weeks (July 18, 2011 - August 14,
2011) of the second fiscal quarter 2012. During this
period, we increased total restaurant sales 5.7% and grew
Company-wide comparable restaurant sales 6.1% year over year. For
the sixteen-week first fiscal quarter of 2012, total restaurant
sales increased by 5.7%, and Company-wide comparable restaurant
sales increased by 6.0% year over year. With the Renewal Program
focusing on our flagship Teppan restaurants, the 8.6% increase in
that brand's comparable sales, driven by a 7.2% increase in
traffic, demonstrates the impact and effectiveness of this
initiative.
Let us match that success with a stock structure that is
appropriate for our business:
NOW IS NOT THE TIME TO RISK BENIHANA'S PROGRESS – SIGN, DATE
AND RETURN THE WHITE PROXY TODAY, EVEN IF YOU VOTED
ALREADY ON ANOTHER COLORED CARD
If your shares are registered in your own name, please sign,
date and mail the enclosed WHITE proxy card to Georgeson in
the self-addressed, stamped envelope provided. If your shares are
held in the name of a brokerage firm, bank nominee or other
institution, please sign, date and mail the enclosed WHITE
proxy card in the self-addressed, stamped envelope provided. If you
have any questions or need assistance in voting your shares, please
contact our proxy solicitor at the following:
Georgeson
199 Water Street, 26th Floor
New York, NY 10038
Stockholders Call Toll-Free (888) 549-6618
Even if you have already voted, please take a moment right now
to sign, date and return the enclosed WHITE proxy card, and
please discard any gold proxy cards you receive.
With appreciation for your investment in, and support for
Benihana,
Richard C. Stockinger
Chairman, Chief Executive Officer, and President
Safe Harbor Statement
Except for the historical matters contained herein, statements
in this letter are forward-looking and are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Investors are cautioned that forward-looking
statements involve risks and uncertainties that may affect the
business and prospects of Benihana, including, without limitation:
risks related to Benihana's business strategy, including the
Renewal Program and marketing programs; risks related to Benihana's
ability to operate successfully in the current challenging economic
environment; risks related to Benihana's efforts to strengthen its
Benihana Teppanyaki concept and build its RA Sushi and Haru brands;
and other risks and uncertainties that may cause results to differ
materially from those set forth in the forward-looking statements.
Past performance may not be indicative of future results. Although
Benihana believes the expectations reflected in such
forward-looking statements are based upon reasonable assumptions,
there can be no assurance that its expectations will be realized.
In addition to the risks and uncertainties set forth above,
investors should consider the risks and uncertainties discussed in
Benihana's filings with the Securities and Exchange Commission,
including, without limitation, the risks and uncertainties
discussed under the heading "Risk Factors" in such filings.
Benihana does not undertake any obligation to publicly update any
forward-looking statement to reflect events or circumstances after
the date on which any such statement is made or to reflect the
occurrence of unanticipated events.
Additional Information
On June 9, 2011, Benihana. filed
with the Securities and Exchange Commission a Registration
Statement on Form S-4, which has since been declared effective by
the Securities and Exchange Commission. The Registration Statement
on Form S-4 contains a proxy statement/prospectus which describes
the proposed reclassification. Stockholders of Benihana are
advised to read the proxy statement/prospectus, because it contains
important information. Such proxy statement/prospectus and
other relevant documents may be obtained, free of charge, on the
Securities and Exchange Commission's website (http://www.sec.gov)
or from Benihana at the Investor Relations section of
www.benihana.com/about or by contacting the Company by telephone at
(305) 593-6770 (Attention: General Counsel).
Benihana and certain persons may be deemed to be participants in
the solicitation of proxies relating to the proposed
reclassification. The participants in such solicitation may include
Benihana's executive officers and directors. Further information
regarding persons who may be deemed participants is available in
Benihana's proxy statement/prospectus.
Media Contacts
Jeremy Fielding / Anntal
Silver
Kekst and Company
(212) 521-4800
SOURCE Benihana Inc.