NASHVILLE, Tenn.--(BUSINESS WIRE)--J. Alexander’s Holdings, Inc. (NYSE: JAX) (the Company), owner and
operator of J. Alexander’s, Redlands Grill, and Stoney River Steakhouse
and Grill, today responded to the unsolicited nonbinding purported
proposal by Ancora Advisors, LLC (Ancora) to acquire all of the
outstanding shares of the Company’s common stock for $11.75 in cash for
each share, as set forth in a letter addressed to the Company’s Board of
Directors on April 8, 2019. Ancora is the holder of approximately
1,261,810 shares of the Company’s common stock, or approximately 8.6% of
the outstanding shares. A copy of Ancora’s letter is publicly available
in Amendment No. 3 to Ancora’s Schedule 13D filed April 8, 2019, with
the Securities and Exchange Commission, file number 005-89109.
The full text of the letter that was sent by the Company’s Board of
Directors to Ancora in response to its purported proposal follows below:
April 11, 2019
VIA E-MAIL
Ancora Advisors LLC
6060 Parkland Blvd., Suite 200
Cleveland,
OH 44124
Attention: Fred DiSanto
RE: Letter from Ancora Advisors, LLC (“Ancora”), dated April
8, 2019
Ladies and Gentlemen:
As previously noted, we acknowledge receipt of your letter dated April
8, 2019, addressed to the Board of Directors (the “Board”) of J.
Alexander’s Holdings, Inc. (“J. Alexander’s” or the “Company”). The
Board has carefully reviewed and evaluated the contents of your letter,
including Ancora’s purported nonbinding proposal to purchase the
outstanding shares of the Company’s common stock for $11.75 in cash per
share, subject to all of the numerous conditions, including obtaining
financing, set forth in the letter.
Ancora’s Purported Proposal Dramatically Undervalues the Company
As we have stated both publicly and privately to representatives of
Ancora, the Board and the Company’s senior management regularly evaluate
potential transactions relating to the Company’s business, including
prospects for alternative financing structures, potential additional
restaurant concepts and other uses of capital, all with a view toward
maximizing shareholder value. The Board takes its fiduciary duties to
all shareholders seriously and strongly believes that it would not be a
prudent or appropriate exercise of those duties to sell the Company at a
price that significantly undervalues the Company at a time when the
business is performing well—as you yourself have stated.
The Board agrees with your assessment that the Company operates a great
business, able to achieve exceptional operating results and consistently
growing same store sales in spite of otherwise challenging environments
for many restaurant operators. We also agree with your view that the
public markets often undervalue small cap stocks and that companies like
J. Alexander’s face additional challenges as a result of added
compliance costs and relative lack of equity analyst coverage. The Board
believes that trading prices for the Company’s stock do not reflect a
full and fair market value for the Company and that your own acquisition
of J. Alexander’s stock over the last two years is evidence of this.
99 Restaurants Transaction was an Opportunity to Diversify Our
Business and Increase Cash Flow
It was for these and numerous other reasons that the Board determined to
pursue the transaction with 99 Restaurants (the “99 Transaction”). As
detailed in the Company’s proxy statement to shareholders related to the
99 Transaction, the Board believed the 99 Transaction would achieve the
shareholder objectives now enumerated by Ancora. The Board continues to
believe the 99 Transaction was a missed opportunity to diversify the
Company’s business, expand its scale and generate increased predictable
cash flows that would have been accretive to all shareholders. Recent
same store sales performance by 99 Restaurants supports the Board’s
view. According to public statements by 99 Restaurants’ majority owner,
99 Restaurants increased its same store sales in every quarter last year
by 1.4%, 0.9%, 5.9% and 2.5% in the first, second, third and fourth
quarters, respectively, and in each quarter exceeded the Black Box
Regional Index. Since the disinterested shareholders turned it down, all
shareholders are now living with the consequences of that lost
opportunity.
The facts relating to the 99 Transaction are well documented, fully
disclosed and are now over a year in the rearview mirror. Further,
contrary to the suggestions of your letter, the Board and the Company
were fully transparent with shareholders regarding potential conflicts
of interest, including overlaps in ownership and management, as well as
the Company’s and various Board members’ relationships to Fidelity
National Financial, Inc. (“FNF”), Cannae Holdings, LLC, Fidelity Newport
Holdings, LLC, Black Knight Advisory Services, LLC (“Black Knight”) and
their respective affiliates. For these reasons, the Board appropriately
conditioned the 99 Transaction on the affirmative vote of the
disinterested shareholders.
Termination of Black Knight Management Consulting Agreement
In addition, the Board disagrees with your characterization of the
recent termination of the Management Consulting Agreement with Black
Knight. As you acknowledge, the Management Consulting Agreement was
entered into contemporaneous with the 2015 spin-off, when the Company
was controlled by its majority owner FNF. The 2018 termination enabled
the Company to eliminate the significant annual advisory fees for 2019
and all future periods and to eliminate the associated Black Knight
equity incentive profits interest grant at a time when the prevailing
trading prices of the Company’s common stock did not exceed the profits
interest hurdle price, such that the Black Knight profits interest
expired unexercised and the Company’s shareholders avoided any share
dilution from the Black Knight profits interest. This was an obvious
benefit to shareholders.
Board Unanimously Believes Ancora’s Purported Proposal does not
Maximize Value for All Shareholders
In regard to the substance of your purported proposal, we believe it
represents Ancora’s attempt to acquire control of the Company at as low
of a price as possible. The Board notes that Ancora’s proposed purchase
price is more than 12% lower than the Company’s 52-week trading high,
and nearly 22% lower than the prevailing equity analyst price target for
the Company. The purported proposal also lacks specific or verifiable
details regarding your financing. Allowing Ancora, or any buyer, to
acquire the Company at a bargain price in order to reap the benefits of
recent substantial investments in new restaurants and the termination of
the Black Knight Management Consulting Agreement—each of which the Board
believes will substantially benefit our earnings, our Company and our
shareholders in the future—would deprive our long-term investors of a
significant opportunity. As a result, the entire Board of Directors,
including a representative of the Company’s largest shareholder, firmly
believes that Ancora’s purported proposal is simply too unattractive to
entertain and unanimously believes that to do so would not be consistent
with the Board’s fiduciary duties to maximize value for all shareholders.
Very truly yours,
The Board of Directors
About J. Alexander’s Holdings, Inc.
J. Alexander’s Holdings, Inc. is a collection of restaurants that focus
on providing high quality food, outstanding professional service and an
attractive ambiance. The Company presently operates 46 restaurants in 16
states. The Company has its headquarters in Nashville, TN.
Forward‐Looking Statements
This press release issued by J. Alexander’s Holdings, Inc. contains
forward‐looking statements, which include all statements that do not
relate solely to historical or current facts, such as statements
regarding our beliefs, expectations, intentions or strategies regarding
the future. Because such statements are based on expectations as to
future events and are not statements of fact, actual results may differ
materially from those projected and are subject to a number of known and
unknown risks and uncertainties, including those risks discussed in the
Company’s Annual Report on Form 10-K for the year ended December 30,
2018, and other filings with the Securities and Exchange Commission. The
Company undertakes no obligation to update any forward‐looking
statements, whether as a result of new information, future events or
otherwise.
