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J. Alexander’s Holdings, Inc. Responds to Letter from Ancora Advisors, LLC


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


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.

J. Alexander’s Holdings, Inc.
Mark A. Parkey
Chief Financial Officer
(615) 269‐1900

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