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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
SHONEY'S, INC.
(Name of Issuer)
Common Stock, $1 par value per share
(Title of Class of Securities)
825039 10 0
(CUSIP Number)
Daniel W. Small
Attorney at Law
Suite 250,
3100 West End Avenue
Nashville, Tennessee 37203
(615) 385-1005
(Name, Address, and Telephone Number of Person
Authorized to Receive Notices
and Communications)
March 20, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box ___.
Check the following box if a fee is being paid with this statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.
See Rule 13d-7.) Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
(Cover page continued on next page)
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The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
CUSIP No. 825039 10 0
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1. Names of Reporting Persons S. S. or I.R.S. Identification Nos. of
Above Persons
Raymond L. Danner
Social Security No. ###-##-####
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) __
(b) __
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3. SEC Use Only
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4. Source of Funds (See Instructions)
OO
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
___
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6. Citizenship or Place of Organization
United States of America
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Number of
Shares
Beneficially
Owned by
Each
Reporting Person
With
7. Sole Voting Power: 4,159,133
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8. Shared Voting Power: 90,169
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9. Sole Dispositive Power: 4,159,133
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10. Shared Dispositive Power: 90,169
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11. Aggregate Amount Beneficially Owned by Each Reporting Person:
4,249,303
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12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
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13. Percent of Class Represented by Amount in Row (11):
8.76%
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14. Type of Reporting Person (See Instructions)
IN
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Item 1. Security and Issuer.
This Statement relates to the $1 par value common stock of Shoney's,
Inc., 1727 Elm Hill Pike, Nashville, Tennessee 37210.
Item 2. Identity and Background.
(a) The person filing this Statement is Raymond L. Danner, a natural
person;
(b) Mr. Danner's business address is Suite 510, 2 International
Plaza, Nashville, Tennessee 37217;
(c) Mr. Danner's present principal occupation or employment is as
Chairman of The Danner Company, which company owns interests in various other
companies unrelated to Shoney's, Inc. The Danner Company has its principal
business address at Suite 510, 2 International Plaza, Nashville, Tennessee
37217;
(d) Mr. Danner has not, during the last five years, been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors);
(e) Mr. Danner has not been a party, during the last five years, to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws; and
(f) Mr. Danner is a citizen of the United States of America.
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Item 3. Source and Amount of Funds or Other Consideration.
Mr. Danner was a founder of Shoney's, Inc. (sometimes referred to herein as
the "Company") and served for approximately 20 years as Chairman and Chief
Executive Officer. Mr. Danner has acquired the subject securities over many
years, principally for cash and through stock splits and/or dividends. Mr.
Danner no longer serves Shoney's, Inc. in any official capacity.
Mr. Danner's most recent acquisition of shares of Shoney's, Inc. was on
July 15, 1993, when he acquired 3,000 shares of the Company for a cash purchase
price of $14.875 per share. No portion of the purchase price was borrowed.
Please refer to the original filing and amendment(s) of this Schedule by
Mr. Danner in 1995 and 1996 for additional information.
Item 4. Purpose of Transaction.
Mr. Danner made no acquisition of securities of the Company that triggered
this filing. Rather, this filing is made to address Mr. Danner's request to the
Board of Directors in a letter to the Board dated March 20, 1997, which is
hereby incorporated herein by reference to Exhibit 1 filed herewith.
As a founder and former Chairman and Chief Executive Officer of Shoney's,
Inc., Mr. Danner holds the Shares for investment. Mr. Danner has been concerned
about the Company's management and performance for several years. His concerns
are highlighted in a letter from him to the Board of Directors of the Company
dated March 13, 1997, which is hereby incorporated herein by reference to
Exhibit 2 filed herewith. Mr. Danner resigned from the Board of Directors of the
Company effective June 30, 1993.
From time to time Mr. Danner has communicated personally, by telephone, and
by correspondence with Mr. C. Stephen Lynn, the Company's Chairman. Mr. Danner
has continued discussions referenced in Amendment No. 1 to this Schedule 13D
concerning a proposed registration agreement with the Company whereby the
Company would agree to register his Shares in the Company in certain offerings
of the Company's securities after his death.
As noted previously, Mr. Danner has recommended Mr. Francis S. Guess as a
Board member for Shoney's Board of Directors. However, no formal response has
been received from the Company concerning this matter through the date of this
filing.
Mr. Danner reviews from time to time the Company's business affairs and
financial position. Based on such evaluation and review, as well as general
economic and industry conditions existing at the time, Mr. Danner may consider
from time to time various alternative courses of action. Such actions may
include the acquisition of additional Shares through open market purchases,
privately negotiated transactions, or otherwise. Alternatively, such actions may
involve the sale of all or a portion of the Shares in the open market, in
privately negotiated transactions or otherwise. Mr. Danner may also, consistent
with the requirements of Regulation 14A, communicate with other Company
shareholders regarding the Company's performance generally.
Except as set forth above, Mr. Danner has no plan or proposals which relate
to or would result in any of the transactions described in subparagraphs (a)
through (j) of Item 4 of Schedule 13D.
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Item 5. Interest in Securities of the Company.
(a) Mr. Danner owns directly, with sole voting and dispositive authority,
4,159,133 shares of the Company. The Company states in its most recent proxy
materials to Shareholders that it has, at January 23, 1997, 48,531,075 shares
outstanding. Consequently, the Company has computed that Mr. Danner owns
beneficially approximately 8.76% of the subject securities. The decrease in Mr.
Danner's ownership percentage of the subject securities has resulted from the
issuance of additional shares thereof by the Company and not as a result of any
action taken by Mr. Danner.
Mr. Danner disclaims beneficial ownership of the following shares pursuant
to Rule 13d-4:
1. Shares held by his wife: 83,068; and
2. Shares held by his wife as Custodian for their son: 7,101.
The aggregate number of the securities as to which Mr. Danner disclaims
beneficial ownership is 90,169 (.0019% of the class).
(b) Please refer to the Response to Item 5(a) above for each person named
in response to paragraph (a), as to the number of shares as to which there is
sole power to vote or to direct the vote, shared power to vote or to direct the
vote, sole power to dispose or to direct the disposition, or shared power to
dispose or to direct the disposition. Provide the applicable information
required by Item 2 with respect to each person with whom the power to vote or to
direct the vote or to dispose or direct the disposition is shared;
Mr. Danner has had no transactions in the subject class of securities in
the past sixty days.
(d) No other person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, such
securities, a statement to that effect should be included in response to this
item.
(e) Mr. Danner has not ceased to be the beneficial owner of more than five
percent of the class of securities.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Company.
There are no contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 and between such persons
and any person with respect to any securities of the Company, including but not
limited to transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, put or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies, naming the
persons with whom such contracts, arrangements, understandings or relationships
have been entered into, exclusive of standard default and similar provisions
contained in loan agreements and related documentation as to any pledged
securities.
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Item 7. Material to be Filed as Exhibits.
The following Exhibits are filed herewith and incorporated herein by
reference:
Exhibit 1 Letter dated March 20, 1997.
Exhibit 2 Letter dated March 13, 1997.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
March 21, 1997
Date Signature
/s/ Raymond L. Danner
Raymond L. Danner
Name/Title
The original statement shall be signed by each person on whose behalf
the statement is filed or his authorized representative. If the statement is
signed on behalf of a person by his authorized representative (other than an
executive officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
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EXHIBIT 1
[DANNER COMPANY LETTERHEAD]
March 20, 1997
VIA UNITED PARCEL SERVICE
Board of Directors
Shoney's Inc.
1727 Elm Hill Pike
Nashville, TN 37210
Ladies and Gentlemen:
ENOUGH IS ENOUGH
When I sent my letter of March 13th, I did not realize that the Shoney's Inc.
quarterly earnings report would be released the next day. This release drives
home the points I made in my letter.
It is now time for the board and management of Shoney's to face up to the solemn
duties owed to the company Shareholders in general, including me as the largest
Shareholder in particular.
In 1993, your CEO came to me and requested that Shoney's buy my stock. You
promised that the company would close the sale on a certain day. You broke that
promise - on the eve of the date of your proposed transaction.
In 1995, your CEO came to me and offered to nominate a representative of my
choice to the board. I recommended Francis S. Guess, a distinguished business
and political figure who is recognized throughout Tennessee. You broke that
promise - and have yet to explain to me why his name was not among the nominees
for board members this year or last.
In 1995, your CEO came to me and requested the use of my consulting abilities in
order to steer Shoney's Inc. back on track, for the sake of all investors. You
promised to use my advice. Another promise broken.
Most insulting of all, you have promised and promised and promised to generate
positive earnings for the Shareholders of Shoney's Inc. Time and time again you
have broken these promises.
I have known most of you for many years and I would prefer not to be in the
position of writing or sending this letter. However, it is necessary. Necessary
for me and critical for Shoney's, Inc. Over the last several days, as I have
thought about those things that Shoney's has reported in its annual report and
in its proxy materials, I have felt a sense of urgency - something has got to be
done. The lasted reports that I have read in the newspaper change this situation
from urgency to emergency.
I have asked myself what your largest Shareholder can do to try to help
Shoney's. One thing I can ask is that the board of directors consider bringing
certain actions for the benefit of Shoney's. It is not clear that such a demand
would do any good here, but that is what may be appropriate.
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Therefore, on behalf of myself and all other Shareholders, with this letter I am
calling on the board to do the following:
(a) Honestly consider whether it can be objective and fair in this matter,
and
(b) Appoint an independent counsel - like and independent prosecutor - an
independent
Shareholder's committee to consider the conduct of the board and/or management
that has brought us to this situation.
I repeat: ENOUGH IS ENOUGH. The time has come for the leadership of Shoney's,
Inc. to look beyond itself to begin to resolve the highly unsatisfactory results
that are evident to all.
The Shareholders are entitled to action by the board on these items immediately
and a full public report by the date of the annual meeting. I would appreciate
the courtesy of an early reply to this demand so that I might consider other
options if the board of directors is insufficiently objective or if it is
unwilling to expose its policies and practices to the light of day.
Sincerely,
/s/Raymond L. Danner
Raymond L. Danner
cc: Counsel
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EXHIBIT 2
[DANNER COMPANY LETTERHEAD]
March 13, 1997
VIA FEDERAL EXPRESS
Board of Directors
Shoney's, Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
Ladies and Gentlemen:
I have been reading through the Shoney's, Inc. annual report and proxy
materials. These reports are very disturbing to me.
As you recall, when I agreed to resign from the Shoney's Board of Directors
in late 1992 or early 1993, the share price was around $24.00. At that time
management approached me and offered to buy my stock. The circumstances
surrounding the Board's failure to live up to its agreement to buy my stock are
well known. Not too long after I resigned, I warned the Board that the newly
amended "poison pill" that the Board was adopting could well serve to hurt
Shoney's share price.
Since 1993, the share price of Shoney's stock has been in free fall. On the
other hand, executive compensation seems to keep going up without stop. Ordinary
Shareholders, of course, don't share in this continued increase -- they are left
holding a continuously emptier bag.
Further, Shoney's appears to be paying its long-term debt by taking out
short-term loans. According to the most recent 10-K report, it appears that
Shoney's will have to come up with some $300 million in the next three years
just to pay principal. In that period of time, interest rates on Shoney's debt
apparently, like executive compensation, will begin to soar out of sight. This
is like paying your house mortgage with your credit card. Pretty soon, it is
lethal.
Finally, in my opinion, food quality and operations at the store level are
at rock bottom in so many locations that it is embarrassing for us all. Unless
these turn around dramatically, the end of this once great company may prove to
be inevitable.
A few particulars, and a quick look at the facts, is helpful and down right
disturbing:
1. The stock price has fallen by nearly two-thirds since early 1993.
2. The stock price performance is way below the S & P 500 Index. Shoney's
Shareholders have not only missed out on the greatest Bull Market in history,
their stock price is going down so fast that it's just plain scary.
3. The stock price performance is well below the S & P 500 Restaurants
Index. Again, Shoney's Shareholders have been left holding the empty brown lunch
bag.
4. The price-to-earnings ratio appears to be well below competitors such as
Cracker Barrel.
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Board of Directors
Shoney's, Inc.
March 13, 1997
Page -2-
5. Stores are being closed constantly.
6. Shoney's just bought TPI and, it appears to me, Shoney's is now closing
or planning to close TPI stores that it just bought. This seems to me to be a
lot of money to spend to buy stores only to close some of them in the next
breath. Wasn't this just a waste of money?
7. Shoney's just bought some other franchise stores (from senior executive
officer Bob Langford?) and, according to information that I've received,
Shoney's is closing some of these stores as well. This seems like another waste
of money.
8. Executive Compensation - both Management costs and Board costs - has
increased even though the stock price has fallen through the floor.
9. Shareholders get no dividends.
10. Shareholders are losing money on their shares.
11. Shoney's continues to spend money on stock option plans and that sort
of thing when its own published numbers show that it needs to spend the money on
operations.
12. Finally, since I offered to come back to run Shoney's for $1 a year,
Shoney's apparently has paid its new Chairman about $900,000.00 and it has paid
his two other senior officers hundreds of thousands of dollars. (THIS DOES NOT
EVEN INCLUDE THE AMOUNTS PAID TO BUY ONE OF THEM OUT OF HIS FRANCHISE!).
On top of the $900,000+ paid to the new Chairman, according to the most
recent proxy statement Shoney's has granted stock options to the new Chairman
with an estimated value of up to $12,535,000.00. This may not seem like a lot to
the members of the Board of Directors, but to most folks it represents more
money than they will see in their lifetimes. It appears that these options vest
even if Shoney's continues to lose money!
The decline in the stock price since 1993 has cost me personally about
$75-$80 million. It has cost the other Shareholders proportionately.
Unfortunately, many of them do not have the other resources that God has blessed
me with. They are suffering - and their suffering is flat out unnecessary.
This list is just intended to highlight a few of the areas that the
Shareholders need an answer for.
I hope that you will let the Shareholders know what you are thinking about
these critical issues as you prepare for this year's Shareholders' Meeting.
Sincerely,
/s/ Raymond L. Danner
Raymond L. Danner
