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SOLICITING MATERIAL
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1997
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No...................]
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
|X| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SHONEY'S, INC.
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(Name of Registrant as Specified in Its Charter)
RAYMOND D. SCHOENBAUM and BETTY J. SCHOENBAUM
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials:
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[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement no.:
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3) Filing Party:
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4) Date Filed:
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CONTACT:
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Stanley J. Kay, Jr. Joele Frank/Matthew Sherman
MacKenzie Partners, Inc. Abernathy MacGregor Group
(212) 929-5940 (212) 371-5999
FOR IMMEDIATE RELEASE:
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ATLANTA, GEORGIA, June 16, 1997 -- The Shoney's Shareholders' Committee
announced today that it is making preliminary filings with the Securities and
Exchange Commission with respect to a solicitation of Agent Designations to call
a special meeting of Shoney's shareholders, as well as proxy materials for the
proposed special meeting.
The Shoney's Shareholders' Committee, which is composed of two shareholders,
Raymond D. Schoenbaum and Betty J. Schoenbaum, collectively is the beneficial
owner of 3,866,971 shares or approximately 8.0% of Shoney's outstanding common
stock, and is the second largest shareholder of the Company. According to
Shoney's bylaws and the Tennessee Business Corporation Act, to call a special
meeting requires demands from shareholders representing at least 10% of Shoney's
common stock.
The Committee's members, Raymond D. Schoenbaum and Betty J. Schoenbaum, are
respectively the son and wife of Alex Schoenbaum, who founded Shoney's in 1947
and served as its first Chairman.
At the special meeting, if called, the Committee would, among other things, seek
to:
. Remove and replace the seven-member Shoney's Board of Directors with
its own slate of nominees.
. Repeal any and all amendments to the Company's bylaws since February
18, 1996 except for those which were approved by a shareholder vote and
those which under law cannot be repealed by the shareholders.
. Amend the bylaws to fix the number of directors at seven, and to
prohibit any change in the size of the Board without shareholder
approval.
Raymond D. Schoenbaum and Betty J. Schoenbaum jointly commented, "As stated in
our recent 13D filings and in a letter to the Shoney's Board, we have been
disappointed with Shoney's operating performance and stock price in recent
years. Shoney's share value dropped nearly 80% in the period from October 29,
1993 to April 25, 1997 (the date on which we filed our first 13D indicating that
we were exploring our options regarding our investment in Shoney's) -- a period
in which the S&P 500 and the S&P Restaurants Index respectively increased 63.6%
and 66.8%." "We believe," they continued, "this astonishing loss of shareholder
value is directly related to the deterioration of the quality of many Shoney's
restaurants and Shoney's overall reputation in the marketplace, for which the
current Board and management must accept responsibility. As the son and wife of
Alex Schoenbaum, Shoney's founder, we regard Shoney's as a legacy of our family
and its struggles in recent years have been personally very distressing to us."
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Shoney's Shareholders' Committee
June 16, 1997
Page 2
Raymond D. Schoenbaum and Betty J. Schoenbaum concluded, "After considering
various alternatives, we have decided that the best way to restore the lost
focus of Shoney's is to seek to replace the Board at the proposed special
meeting. We look forward to discussing our ideas for improving Shoney's
operations, reputation and share value during our upcoming solicitation
periods."
Raymond D. Schoenbaum has been actively involved in the restaurant industry
since 1974, and he has extensive experience in the business, including
substantial experience in the full service dining industry and in the quality
fast food market. From 1974 to 1985, Raymond D. Schoenbaum successfully grew a
Wendy's franchisee (Restaurants Systems, Inc.) to in excess of 30 stores which
he sold to Wendy's in 1985 for approximately $40 million. Between 1985 and 1995
he developed and operated Ray's on the River and Rio Bravo, a successful chain
of casual restaurants. In 1995, Raymond D. Schoenbaum sold Ray's on the River
and Rio Bravo to Applebee's International Inc. for approximately $70 million,
and became a director of Applebee's following the sale. In addition, Raymond D.
Schoenbaum has been involved with the turnaround of companies in the restaurant
and restaurant services industries, including Squirrel Companies, Inc., a
manufacturer of restaurant point-of-source computer equipment, as the former
chairman of the board, and Max & Erma's Restaurants, Inc., as a former member of
the board and largest shareholder.
The Committee expects to mail its BLUE Agent Designation cards and related
solicitation statements to all Shoney's shareholders in early July 1997.
Following is the complete text of a letter sent today from Raymond D.
Schoenbaum, to the Board of Directors of Shoney's, Inc.:
June 16, 1997
Board of Directors of Shoney's, Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
Re: Meeting of the Shoney's, Inc. Board of Directors
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Ladies and Gentlemen:
My mother and I were surprised and disappointed by your letter in which
you rejected our request to address the Board at its two-day retreat in mid-June
to discuss Shoney's current situation and possible alternatives for resolving
Shoney's problems. We found it disturbing that you refused to meet with a
representative of shareholders holding approximately 8% of Shoney's stock,
particularly one who is interested in working with, and has the experience to
help, the Board in addressing Shoney's problems.
We also were surprised by the Board's suggestion that we submit our
proposals in writing after which the Board would "consider a time in the future"
for us to meet with the Board "or a
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Shoney's Shareholders' Committee
June 16, 1997
Page 3
committee of the Board." We believe that this statement demonstrates a lack of
understanding of the urgency of Shoney's situation and the lack of leadership
under the current management. We had expected that, in order to address Shoney's
current problems, the Board would be interested in obtaining as much information
and as many ideas as soon as possible. Instead, rather than taking a small
amount of time during the Board's two-day retreat to discuss our concerns, the
Board's response appears designed only to delay our requested meeting to discuss
with you the crucial issues facing Shoney's.
As we stated in our June 2 letter, we continue to believe that Shoney's
is at a critical juncture. We, as Shoney's shareholders, have endured many years
of poor financial performance. Over the last several years, Shoney's
shareholders have provided you with time and have patiently given you the
opportunity to revitalize Shoney's. The result of this patience has been a
substantial erosion in the stock price. Despite this record, the Board continues
to state that it has the "proper business strategy and management team." After
two years under the current management, however, Shoney's condition has not only
failed to improve, but, in fact, has deteriorated. As a result, we believe that
Shoney's shareholders no longer have the "time", nor should we be asked to have
the "patience", that you request.
Because of Shoney's continued poor performance and the Board's refusal
to meet with me at the June Board meeting despite the urgency of the present
situation, we feel that we are left with no alternative but to present our case
directly to the shareholders. We have filed documents today with Shoney's and
with the SEC for the purpose of calling a special meeting to remove the current
members of the Board and replace them with our nominees, who would intend to put
in place a new management team committed to addressing Shoney's condition with
the urgency it requires.
We believe Shoney's is running out of time and that its long-term
viability is threatened. We need to take decisive action now to ensure the
long-term survival of the company for the benefit of its shareholders.
Sincerely,
Raymond D. Schoenbaum
# # #
INFORMATION REGARDING PARTICIPANTS
AND CERTAIN OTHER PERSONS
Raymond D. Schoenbaum has his principal business address at 1640 Powers Ferry
Road, Building Two, Suite 100, Marietta, Georgia 30067. Betty J. Schoenbaum has
her principal residential address at 5541 Gulf of Mexico Drive, Longboat Key,
Florida 34228. Raymond D. Schoenbaum is a private
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Shoney's Shareholders' Committee
June 16, 1997
Page 4
investor. Betty J. Schoenbaum is not employed. As of the date hereof, Raymond D.
Schoenbaum is deemed to own beneficially (as that term is defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
508,061 shares of Common Stock of Shoney's, which constitutes approximately 1.0%
of the outstanding shares of Common Stock (based on information provided by
Shoney's in its quarterly report on Form 10-Q for the quarter ended February 16,
1997). As of the date hereof, Betty J. Schoenbaum is deemed to own beneficially
3,394,480 shares of Common Stock of Shoney's, which constitutes approximately
7.0% of the outstanding shares of Common Stock (based on information provided by
Shoney's in its quarterly report on Form 10-Q for the quarter ended February 16,
1997). As of the date hereof, Raymond D. Schoenbaum and Betty J. Schoenbaum are
deemed to own beneficially 3,866,791 shares of Common Stock of Shoney's, which
constitutes approximately 8.0% of the outstanding shares of Common Stock (based
on information provided by Shoney's in its quarterly report on Form 10-Q for the
quarter ended February 16, 1997).
In connection with Montgomery Securities' engagement as financial advisor to the
Shoney's Shareholders' Committee, the Committee anticipates that certain
employees of Montgomery Securities may communicate in person, by telephone or
otherwise with a limited number of institutions, brokers or other persons who
are shareholders for the purpose of assisting in the solicitation. Montgomery
Securities will not receive any fee for, or in connection with, such
solicitation activities apart from the fees they are otherwise entitled to
receive under their engagement. The principal business address of Montgomery
Securities is 600 Montgomery Street, San Francisco, California 94111. In the
ordinary course of its business, Montgomery Securities maintains customary
arrangements and may effect transactions in the securities of the Company for
the accounts of its customers. As a result of its engagement by the Shoney's
Shareholders' Committee, Montgomery Securities restricted its proprietary
trading in the securities of Shoney's as of June 16, 1997 (although it may still
execute trades for customers on an unsolicited agency basis). As of June 12,
1997, Montgomery Securities did not beneficially own any Common Stock of
Shoney's, and held of record 10,312 shares of Common Stock for customer
accounts.
In addition, Howard E. Sachs, John S. Ellis and W. Douglas Benn, advisors to
Raymond D. Schoenbaum, may assist in soliciting Agent Designations, although
none of them nor the Shoney's Shareholders' Committee admits that any of them is
a "participant", as defined in Schedule 14A promulgated by the Securities and
Exchange Commission under the Exchange Act. Mr. Sachs has his principal business
address at 1901 Powers Ferry Road, Suite 260, Atlanta, Georgia 30339. As of the
date hereof, Mr. Sachs was the beneficial owner of 5250 shares of Common Stock
of Shoney's. Mr. Ellis has his principal business address at 1640 Powers Ferry
Road, Building Two, Suite 100, Marietta, Georgia 30067. As of the date hereof,
Mr. Ellis did not own beneficially or of record any shares of Common Stock. Mr.
Benn has his principal business address at 1640 Powers Ferry Road, Building Two,
Suite 100, Marietta, Georgia 30067. As of the date hereof, Mr. Benn did not own
beneficially or of record any shares of Common Stock.
