Supplement to the Definitive Proxy Statement
As previously announced, on October 16,
2017, Ruby Tuesday, Inc., a Georgia corporation (“Ruby Tuesday”), entered into an Agreement and Plan of Merger (the
“Merger Agreement”) with RTI Holding Company, LLC, a Delaware limited liability company (“Holding”), and
its wholly-owned subsidiary, RTI Merger Sub, LLC, a Georgia limited liability company (“Merger Subsidiary”). Both Holding
and Merger Subsidiary are affiliates of NRD Partners II, L.P. (the “Fund”). Pursuant to the terms of the Merger Agreement,
Merger Subsidiary will be merged with and into Ruby Tuesday, with Ruby Tuesday surviving the merger as a wholly-owned subsidiary
of Holding (the “Merger”).
On November 20, 2017, Ruby Tuesday filed
a definitive proxy statement on Schedule 14A (the “Definitive Proxy Statement”) with the Securities and Exchange Commission
(the “SEC”) in connection with a special meeting of the stockholders of Ruby Tuesday, scheduled for December 20, 2017,
at which stockholders of Ruby Tuesday will be asked to consider and vote upon, among other proposals, a proposal to approve and
adopt the Merger Agreement.
Ruby Tuesday makes the below listed supplemental
disclosures to the Definitive Proxy Statement in this Form 8-K. These supplemental disclosures should be read in conjunction with
the Definitive Proxy Statement, which in turn should be read in its entirety. Defined terms used but not defined herein have the
meanings set forth in the Definitive Proxy Statement. To the extent that information in this Form 8-K differs from or updates information
contained in the Definitive Proxy Statement, the Definitive Proxy Statement shall be deemed updated by the information contained
in this Form 8-K.
Summary (Beginning of Page 1 of the Definitive Proxy Statement)
The second sentence in the second paragraph
on page 10 of the Definitive Proxy Statement is revised to read as follows (supplemental disclosure underlined, strikethrough of
deleted disclosure):
At the close of business on November
17
15
,
2017, 61,190,829 shares of Ruby Tuesday common stock were issued and outstanding, approximately 2.7% of which were held by Ruby
Tuesday’s directors and executive officers.
Questions and Answers (Beginning of Page 12 of the Definitive
Proxy Statement)
The fourth sentence in the paragraph beginning
with “The record date for the special meeting . . .” on page 15 of the Definitive Proxy Statement is revised to read
as follows (supplemental disclosure underlined, strikethrough of deleted disclosure):
At the close of business on November
17
15
,
2017, there were 61,190,829 shares of Ruby Tuesday common stock issued and outstanding, approximately 2.7% of which were held by
Ruby Tuesday’s directors and executive officers.
The Special Meeting – Record Date; Stockholders Entitled
to Vote (Beginning on Page 24 of the Definitive Proxy Statement)
The second sentence in the second paragraph
on page 24 of the Definitive Proxy Statement is revised to read as follows (supplemental disclosure underlined, strikethrough of
deleted disclosure):
At the close of business on November
17
15
,
2017, 61,190,829 shares of Ruby Tuesday common stock were issued and outstanding, and there were
1,804
1,805
holders of record of Ruby Tuesday common stock.
The Special Meeting – Voting by Ruby Tuesday’s
Directors and Executive Officers (Beginning on Page 25 of the Definitive Proxy Statement)
The first sentence in the fourth paragraph
on page 25 of the Definitive Proxy Statement is revised to read as follows (supplemental disclosure underlined, strikethrough of
deleted disclosure):
At the close of business on November
17
15
,
2017, directors and executive officers of Ruby Tuesday and their affiliates were entitled to vote
1,641,182
1,147,693
shares of Ruby Tuesday common stock, or approximately
2.7%
1.9%
of the shares of Ruby Tuesday common stock
issued and outstanding on that date.
Market Prices of Ruby Tuesday Common Stock (Beginning of
Page 81 of the Definitive Proxy Statement)
The third sentence in the second full paragraph
on page 81 of the Definitive Proxy Statement is revised to read as follows (supplemental disclosure underlined, strikethrough of
deleted disclosure):
At the close of business on November
17
15
,
2017, there were
1,804
1,805
holders of record of Ruby Tuesday common stock.
The second sentence in the third full paragraph
on page 81 of the Definitive Proxy Statement is revised to read as follows (supplemental disclosure underlined, strikethrough of
deleted disclosure):
At the close of business on November
17
15
,
2017, Ruby Tuesday had 61,190,829 shares of Ruby Tuesday common stock issued and outstanding.
Litigation Updates
As described in the Definitive Proxy Statement,
in connection with the transactions contemplated by the Merger Agreement, as of November 15, 2017, various combinations of Ruby
Tuesday, its directors, Holding, Merger Subsidiary and the Fund have been named as defendants in six purported stockholder class
actions filed in the United States District Court for the Eastern District of Tennessee by alleged stockholders of Ruby Tuesday.
The lawsuits are captioned
Maseman v. Ruby Tuesday, Inc., et al.
, 3:17-cv-00478 (filed on November 8, 2017),
Sun v. Ruby
Tuesday, Inc., et al.
, 3:17-cv-00482 (filed on November 9, 2017) (“
Sun
”),
Rosenfeld v. Ruby Tuesday,
Inc., et al.
, 3:17-cv-00485 (filed on November 10, 2017),
Raul v. Ruby Tuesday, Inc., et al.
, 3:17-cv-00494 (filed on
November 13, 2017) (“
Raul
”),
Patterson v. Ruby Tuesday, Inc., et al.
, 3:17-cv-00495 (filed on November
14, 2017) (“
Patterson
”) and
Breslau v. Ruby Tuesday, Inc., et al.
, 3:17-cv-00496 (filed on November 14,
2017) (collectively, the “Previously Disclosed Actions”).
On November 16, 2017, a purported stockholder
class action was filed in the United States District Court for the Eastern District of Tennessee against Ruby Tuesday, its directors,
Holding and Merger Subsidiary. The lawsuit is captioned
Williams v. Ruby Tuesday, Inc., et al.
, 3:17-cv-00499 (“
Williams
”).
On November 17, 2017, a purported stockholder
class action was filed in the United States District Court for the Eastern District of Tennessee against Ruby Tuesday and its directors.
The lawsuit is captioned
Saile v. Ruby Tuesday, Inc., et al.
, 3:17-cv-00501 (together with the Previously Disclosed Actions
and
Williams
, the “Actions”).
On November 21, 2017, plaintiffs in the
Actions filed motions to consolidate the Actions and appoint Marcell Maseman as interim lead plaintiff, among other actions.
On November 28, 2017, a stockholder action
was filed in the United States District Court for the Eastern District of Tennessee against Ruby Tuesday and its directors. The
lawsuit is captioned
Bailey v. Ruby Tuesday, Inc., et al.
, 3:17-cv-00511 (“
Bailey
”).
The complaints in the Actions and
Bailey
assert claims against various combinations of Ruby Tuesday, its directors, Holding, Merger Subsidiary and the Fund pursuant to
Section 14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Ruby Tuesday’s directors (and in
Williams
, including Holding and Merger
Subsidiary) pursuant to Section 20(a) of the Exchange Act and
generally allege that the preliminary proxy statement omitted certain material information regarding the Merger, and that Ruby
Tuesday’s directors had control person liability for the alleged material omissions. In addition, the
Patterson
complaint
asserts a claim against Ruby Tuesday’s directors for breach of fiduciary duties. The complaints generally seek, among other
remedies, to enjoin the Merger, or in the event that the Merger is consummated, rescission of the Merger and unspecified damages,
costs and attorney’s fees. The defendants believe that the Actions and
Bailey
are without merit and intend to defend
vigorously against all claims asserted.
Between November 30, 2017 and December
4, 2017, plaintiffs in
Sun
,
Raul
,
Patterson
, and
Williams
filed notices of voluntary dismissal that
dismissed the Fund, Holding, and Merger Subsidiary (as applicable) as defendants from those respective actions.
On December 6, 2017, a purported Ruby Tuesday stockholder opposed
the appointment of Marcel Maseman as interim lead plaintiff in the Actions.
Additional Supplement to the Definitive Proxy Statement In
Connection with the Actions
Ruby Tuesday, its directors, Holding, Merger
Subsidiary and the Fund have vigorously denied, and continue to vigorously deny, that they have breached any fiduciary duty, committed
or aided and abetted in the commission of any violation of law or engaged in any of the wrongful acts that have been or could have
been alleged in the Actions and
Bailey
(or other litigation related to the Merger), and expressly maintain that they diligently
and scrupulously complied with their fiduciary and other legal obligations. Nonetheless, Ruby Tuesday makes the below listed additional
supplemental disclosures to the Definitive Proxy Statement in this Form 8-K in connection with the Actions. These supplemental
disclosures should be read in conjunction with the Definitive Proxy Statement, which in turn should be read in its entirety. Defined
terms used but not defined herein have the meanings set forth in the Definitive Proxy Statement. To the extent that information
in this Form 8-K differs from or updates information contained in the Definitive Proxy Statement, the Definitive Proxy Statement
shall be deemed updated by the information contained in this Form 8-K.
The Merger (Proposal 1) – Background of the Merger
(Beginning on Page 29 of the Definitive Proxy Statement)
The last sentence in the fourth paragraph
on page 33 of the Definitive Proxy Statement is revised to read as follows (supplemental disclosure underlined):
All of the confidentiality agreements contained a
customary standstill provision prohibiting, among other things, the counterparty from acquiring shares of Ruby Tuesday common stock
and waging a proxy contest or other shareholder activism campaign
and included a customary “don’t ask, don’t
waive” provision preventing such counterparty from requesting to waive the standstill provision without the prior consent
of Ruby Tuesday
.
Such standstill provisions will terminate by their terms upon the end of a negotiated time period ranging
from one to two years as the case may be. All of the confidentiality agreements continue to be in effect as of December 11, 2017,
except that, as described below, on August 14, 2017, Ruby Tuesday agreed to waive Bidder 8’s and Bidder 11’s obligations
under the standstill provision of their confidentiality agreements
.
The second paragraph on page 42 of the Definitive
Proxy Statement is revised to read as follows (supplemental disclosure underlined):
On August 14, 2017, at the direction of the Ruby Tuesday
board, UBS informed Bidder 8 and Bidder 11 that Ruby Tuesday was entering into exclusive discussions with another bidder and that
it was terminating discussions with Bidder 8 and Bidder 11 in connection with a change-of-control transaction. At the same time,
Ruby Tuesday agreed to waive Bidder 8’s and Bidder 11’s obligations under the standstill provision of their respective
confidentiality agreements to the extent necessary to permit each such party to continue to submit unsolicited confidential proposals
to Ruby Tuesday.
The standstill provisions (including the “don’t ask, don’t waive” provisions) of the
confidentiality agreements entered into with other bidders continue to be in effect as of December 11, 2017.
The Merger (Proposal 1) – Opinion of Ruby Tuesday’s
Financial Advisor (Beginning on Page 48 of the Definitive Proxy Statement)
The second full paragraph on page 51 of
the Definitive Proxy Statement is revised to read as follows (supplemental disclosure underlined):
UBS performed discounted cash flow analyses utilizing
financial forecasts and estimates prepared by the management of Ruby Tuesday. See the section entitled “The Merger (Proposal
1)—Certain Financial Projections” beginning on page 53 of this proxy statement. UBS calculated ranges of implied present
values (as of October 15, 2017) of the standalone, after tax, unlevered, free cash flows that Ruby Tuesday was forecasted to generate
from October 15, 2017 through May 31, 2022 and of terminal values for Ruby Tuesday. Implied terminal values were derived by applying
to Ruby Tuesday’s 2022 estimated unlevered, free cash flows a range of perpetuity growth rates of 1.5% to 2.5%, which range
was selected based on UBS’s professional judgment and expertise. Implied present values of cash flows and terminal values
were calculated using discount rates ranging from 9.5% to 10.5%, based on the estimated range of Ruby Tuesday’s weighted
average cost of capital
, using the capital asset pricing model and based on considerations that UBS deemed relevant in its professional
judgment and experience, taking into account certain metrics including yields for U.S. Treasury notes, levered and unlevered betas
for a comparable group of companies, market risk and size premia, Ruby Tuesday’s estimated cost of debt, and Ruby Tuesday's
target capital structure weighting
. The discounted cash flow analyses resulted in
a range of implied terminal enterprise
value to next twelve months estimated EBITDA multiples of 4.6x to 5.9x for Ruby Tuesday and
a range of implied equity values
of $1.43 to $2.44 per share for Ruby Tuesday common stock.
The table immediately below the third full
paragraph on page 51 of the Definitive Proxy Statement is revised to read as follows (supplemental disclosure underlined):
Announcement Date
|
Acquiror
|
Target
|
Enterprise Value ($mm)
|
January 24, 2017
|
Golden Gate Capital
|
Bob Evans Restaurants.
|
565
|
May 22, 2015
|
NRD Partners I, L.P.
|
Frisch Restaurants, Inc.
|
173
|
May 20, 2014
|
Sentinel Capital Partners / TriArtisan Capital Partners
|
TGI Fridays, Inc.
|
890
|
May 16, 2014
|
Golden Gate Capital
|
Red Lobster
|
2,113
|
January 16, 2014
|
Apollo Global Management, LLC
|
CEC Entertainment, Inc.
|
1,309
|
May 1, 2012
|
Centerbridge Partners, L.P.
|
Chang’s Bistro, Inc.
|
1,039
|
May 22, 2012
|
Angelo, Gordon & Co.
|
Benihana, Inc.
|
274
|
February 6, 2012
|
Fidelity National Financial, Inc.
|
O’Charley’s Inc.
|
300
|
December 16, 2011
|
Landry’s, Inc.
|
Morton’s Restaurant Group Inc.
|
188
|
November 8, 2011
|
Landry’s, Inc.
|
McCormick & Schmick's Seafood Restaurants, Inc.
|
132
|
May 25, 2011
|
Golden Gate Capital
|
California Pizza Kitchen, Inc.
|
452
|
August 30, 2010
|
Kelso & Company
|
Logan’s Roadhouse, Inc.
|
560
|
May 3, 2010
|
Oak Hill Capital Partners
|
Dave & Buster’s, Inc.
|
570
|
November 3, 2009
|
Tilman J. Fertitta
|
Landry’s Restaurants Inc.
|
1,140
|
The following disclosure is added on page
52 of the Definitive Proxy Statement following the second sentence of the last paragraph on page 51 of the Definitive Proxy Statement
beginning with “UBS reviewed, among other things . . .”, and a paragraph break is inserted after such disclosure:
The results of this analysis are indicated
below:
|
EV/LTM
EBITDA
Multiples
|
Selected Transactions
|
|
|
|
Golden Gate Capital / Bob Evans Restaurants.
|
|
8.6x
|
|
NRD Partners I, L.P. / Frisch Restaurants, Inc.
|
|
7.9x
|
|
Sentinel Capital Partners & TriArtisan Capital Partners / TGI Fridays, Inc.
|
|
7.5x
|
|
Golden Gate Capital / Red Lobster
|
|
9.2x
|
|
Apollo Global Management, LLC / CEC Entertainment, Inc.
|
|
7.8x
|
|
Centerbridge Partners, L.P. / Chang’s Bistro, Inc.
|
|
8.4x
|
|
Angelo, Gordon & Co. / Benihana, Inc.
|
|
9.1x
|
|
Fidelity National Financial, Inc. / O’Charley’s Inc.
|
|
8.0x
|
|
Landry’s, Inc. / Morton’s Restaurant Group Inc.
|
|
7.7x
|
|
Landry’s, Inc. / McCormick & Schmick's Seafood Restaurants, Inc.
|
|
8.1x
|
|
Golden Gate Capital / California Pizza Kitchen, Inc.
|
|
7.6x
|
|
Kelso & Company / Logan’s Roadhouse, Inc.
|
|
7.8x
|
|
Oak Hill Capital Partners / Dave & Buster’s, Inc.
|
|
6.9x
|
|
Tilman J. Fertitta / Landry’s Restaurants Inc.
|
|
5.9x
|
|
Median
|
|
7.8x
|
|
Mean
|
|
7.9x
|
|
|
|
|
|
Ruby Tuesday, Inc.
|
|
|
|
As of September 5, 2017
|
|
7.9x
|
|
The following disclosure is added following
the third sentence of the paragraph beginning with “UBS reviewed, among other things . . .” on page 52 of the Definitive
Proxy Statement, and a paragraph break is inserted after such disclosure:
The results of this analysis are indicated below:
|
EV/NTM
EBITDA
Multiples
|
Selected Companies
|
|
|
|
Bloomin’ Brands, Inc.
|
|
6.6x
|
|
Brinker International, Inc.
|
|
6.8x
|
|
Darden Restaurants, Inc.
|
|
9.4x
|
|
Red Robin Gourmet Burgers, Inc.
|
|
7.1x
|
|
Median
|
|
6.9x
|
|
Mean
|
|
7.5x
|
|
Important Information For Investors And Stockholders
This communication does not constitute an offer to buy or sell
or the solicitation of an offer to buy or sell any securities. In connection with the Merger, Ruby Tuesday has filed with the SEC
the Definitive Proxy Statement on November 20, 2017. The Definitive Proxy Statement has been mailed to stockholders of Ruby Tuesday.
This
communication is not a substitute for the Definitive Proxy Statement
or any other documents Ruby Tuesday and/or Holding may file with the SEC in connection with the proposed transaction. INVESTORS
AND SECURITY HOLDERS OF RUBY TUESDAY AND HOLDING ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS AND
SUPPLEMENTS THERETO) AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of
the Definitive Proxy Statement and any other documents filed with the SEC by Ruby Tuesday and/or Holding through the website maintained
by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Ruby Tuesday will be available free of charge on
Ruby Tuesday’s internet website at http://www.rubytuesday.com or by contacting Ruby Tuesday’s Investor Relations Director
by email at RubyTuesdayIR@icrinc.com or by phone at (646) 277-1273.
Participants in Solicitation
Ruby Tuesday, Holding, their respective directors and certain
of their respective executive officers may be considered participants in the solicitation of proxies in connection with the proposed
transaction. Information about the directors and executive officers of Ruby Tuesday is set forth in the Definitive Proxy Statement,
its Annual Report on Form 10-K for the fiscal year ended June 6, 2017, which was filed with the SEC on August 21, 2017 and amended
on October 4, 2017, certain of its Quarterly Reports on Form 10-Q and certain of its Current Reports filed on Form 8-K.
These documents can be obtained free of charge from the sources
indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct
and indirect interests, by security holdings or otherwise, which may be different than those of Ruby Tuesday’s stockholders,
is contained in the Definitive Proxy Statement and other relevant materials filed with the SEC.
Forward Looking Statements
Certain statements in this communication regarding the
proposed transaction between Ruby Tuesday and Holding are “forward-looking” statements. The words
“anticipate,” “believe,” “ensure,” “expect,” “if,”
“intend,” “estimate,” “probable,” “project,” “forecasts,”
“predict,” “outlook,” “aim,” “will,” “could,”
“should,” “would,” “potential,” “may,” “might,”
“anticipate,” “likely” “plan,” “positioned,” “strategy,” and
similar expressions, and the negative thereof, are intended to identify forward-looking statements. These forward-looking
statements, which are subject to risks, uncertainties and assumptions about Ruby Tuesday and Holding, may include projections
of their respective future financial performance, their respective anticipated growth strategies and anticipated trends in
their respective businesses. These statements are only predictions based on current expectations and projections about future
events. There are important factors that could cause actual results, level of activity, performance or achievements to differ
materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking
statements, including the risk factors set forth in Ruby Tuesday’s Definitive Proxy Statement, most recent report on
Form 10-K, Form 10-Q and other documents on file with the SEC and the factors given below:
|
·
|
failure of Holding to obtain the financing required to consummate the proposed transaction;
|
|
·
|
failure to obtain the approval of stockholders of Ruby Tuesday in connection with the proposed transaction;
|
|
·
|
the failure to consummate or delay in consummating the proposed transaction for other reasons;
|
|
·
|
the timing to consummate the proposed transaction;
|
|
·
|
the risk that a condition to closing of the proposed transaction may not be satisfied; and
|
|
·
|
the diversion of management time to transaction-related issues.
|
Ruby Tuesday’s forward-looking statements are based on
assumptions that Ruby Tuesday believes to be reasonable but that may not prove to be accurate. Neither Ruby Tuesday nor Holding
can guarantee future results, level of
activity, performance or achievements. Moreover, neither Ruby
Tuesday nor Holding assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Ruby Tuesday
and Holding assume no obligation to update or revise any forward-looking statements as a result of new information, future events
or otherwise, except as may be required by law. Readers are cautioned not to place undue reliance on these forward-looking statements
that speak only as of the date hereof.