sec document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Under Rule 14a-12
FRIENDLY ICE CREAM CORPORATION
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(Name of Registrant as Specified in Its Charter)
THE LION FUND L.P.
BIGLARI CAPITAL CORP.
WESTERN SIZZLIN CORP.
SARDAR BIGLARI
PHILIP L. COOLEY
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(Name of Persons(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:
2
The Lion Fund L.P. (the "Lion Fund"), together with the other
participants named herein, is filing materials contained in this Schedule 14A
with the Securities and Exchange Commission ("SEC") in connection with the
anticipated solicitation of proxies for the election of two nominees as
directors at the 2007 annual meeting of stockholders (the "Annual Meeting") of
Friendly Ice Cream Corporation ("Friendly"). The Lion Fund has not yet filed a
proxy statement with the SEC with regard to the Annual Meeting.
Item 1: On January 2, 2007, Sardar Biglari and Western Sizzlin Corp.
issued the following press release:
PRESS RELEASE
SARDAR BIGLARI ISSUES STATEMENT; LION FUND GROUP AND FRIENDLY ICE CREAM CORP.
UNABLE TO REACH AGREEMENT ON BOARD SEATS
ROANOKE, Va., Jan. 2 /PRNewswire-FirstCall/ -- Sardar Biglari, Chairman
of The Lion Fund, L.P. and Western Sizzlin Corp. (OTC Bulletin Board: WSZL -
News), issued the following statement:
On September 20, 2006, we asked the Friendly Ice Cream Corp. (Amex: FRN
- News) for two board seats in order for us to serve the best interests of all
shareholders. Three months later, on December 20, 2006, the company offered us
two board seats with a major restriction which would limit our ability to act in
the best interests of the company's stockholders. In light of the company's poor
performance and total disregard for proper corporate governance, we cannot
accept restrictions on our ability to hold the existing board and its management
accountable for the company's performance. Nevertheless, on December 21, 2006,
we informed the company that we would accept its offer, but only if the board
agreed to place a binding management proposal on the 2007 annual meeting agenda
to declassify the board, that is, to make the election of the entire board a
yearly occurrence. This change would represent a significant start towards
improving the corporate governance of the company and making the board
answerable to the stockholders, the true owners of the company.
Research indicates that a classified board diminishes the value of a
company because that system obstructs directors' accountability to shareholders.
Unfortunately, earlier today, the board rejected our recommendation with no
clear explanation of its refusal to declassify the staggered board -- another
marker of its poor business judgment.
The cost of an entrenched board is weighing heavily on Friendly's
value. If the board were concerned about acting in the best interest of
shareholders, it would have already acted on our previous request to grant us
two board seats without restrictions, or the board would have accepted our
recommendation to put the declassification of the board to a binding shareholder
proposal. Either action would have avoided a costly and distracting proxy
battle, which as a last resort we are now forced to wage. We are confident that
stockholders will support constructive change when we seek their votes in 2007
to elect our director nominees. No rhetoric can overcome the record of this
board. We own; we care.
THIS COMMUNICATION IS NOT A SOLICITATION OF A PROXY WHICH MAY BE DONE
ONLY PURSUANT TO A DEFINITIVE PROXY STATEMENT. STOCKHOLDERS ARE ADVISED TO READ
THE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES
BY THE LION FUND L.P., BIGLARI CAPITAL CORP., WESTERN SIZZLIN CORP., SARDAR
BIGLARI AND PHILIP L. COOLEY FROM THE SHAREHOLDERS OF FRIENDLY ICE CREAM
CORPORATION, FOR USE AT ITS 2007 ANNUAL MEETING OF STOCKHOLDERS WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. WHEN COMPLETED, A
DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY WILL BE MAILED TO STOCKHOLDERS OF
FRIENDLY ICE CREAM CORPORATION AND WILL BE AVAILABLE AT NO CHARGE AT THE
SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. IN ADDITION,
COPIES OF THE PROXY STATEMENT AND OTHER DOCUMENTS WILL BE PROVIDED WITHOUT
CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO OUR PROXY
SOLICITOR, MORROW & CO., INC. AT ITS TOLL-FREE NUMBER (800) 607-0088. THE
PARTICIPANTS IN THE PROXY SOLICITATION ARE ANTICIPATED TO BE THE LION FUND L.P.,
BIGLARI CAPITAL CORP., WESTERN SIZZLIN CORP., SARDAR BIGLARI AND PHILIP L.
COOLEY (THE "PARTICIPANTS"). INFORMATION REGARDING CERTAIN OF THE PARTICIPANTS,
INCLUDING THEIR DIRECT OR INDIRECT INTERESTS, BY SECURITY HOLDINGS OR OTHERWISE,
IS CONTAINED IN THE SCHEDULE 13D FILED BY THEM WITH THE SECURITIES AND EXCHANGE
COMMISSION ON AUGUST 7, 2006 WITH RESPECT TO FRIENDLY ICE CREAM CORPORATION, AS
AMENDED, MOST RECENTLY ON DECEMBER 18, 2006. THAT SCHEDULE 13D, AS AMENDED, IS
CURRENTLY AVAILABLE AT NO CHARGE ON THE SECURITIES AND EXCHANGE COMMISSION'S
WEBSITE AT HTTP://WWW.SEC.GOV. AS OF JANUARY 2, 2007, EACH OF THE PARTICIPANTS
MAY BE DEEMED TO BENEFICIALLY OWN 1,182,388 SHARES OF COMMON STOCK OF FRIENDLY
ICE CREAM CORPORATION. EACH OF THE PARTICIPANTS DISCLAIMS BENEFICIAL OWNERSHIP
OF SUCH SHARES EXCEPT TO THE EXTENT OF HIS/ITS PECUNIARY INTEREST THEREIN.
Source: Western Sizzlin Corp.
Item 2: On or around December 13, 2006, Sardar Biglari delivered the
following letter to the shareholders of Friendly:
THE LION FUND, L.P.
9311 SAN PEDRO AVENUE, SUITE 1440
SAN ANTONIO, TEXAS 78216
TELEPHONE (210) 344-3400
FAX (210) 344-3411
SARDAR BIGLARI, CHAIRMAN
December 13, 2006
Dear Fellow Shareholder:
On December 11, 2006, I notified the Chairman of the Board of Friendly
Ice Cream Corp. that the board's proposed offer of one board seat to our group
was not acceptable and included unwarranted constraints upon which the proposed
offer was tendered. I have enclosed a copy of my letter, along with the proposal
presented by the board. In my reply to Mr. Smith, I explained that the board's
proposal was unreasonable because it sought to marginalize our influence and
nullify any constructive ideas we may offer to enhance shareholder value.
Subsequent to my letter, Mr. Smith issued a letter that I believe is
full of inaccuracies and inconsistencies and is intended to misinform
shareholders. One sample will paint the picture and illustrate his errors of
omission. I ask you to read the board's proposal carefully and examine Mr.
Smith's assertion, "Our offer to Mr. Biglari contained customary conditions.
Each of our current directors was prepared to agree to these conditions." In
actuality, the conditions are far from customary. Furthermore, the statement
ignores the fact that four of the five board members have almost no financial
interest in the company. Only truly independent individuals with a significant
investment in the company would care about their ability to serve unimpeded. The
conditions proposed by the board represent an attempt to block positive change
at Friendly's. Clearly, it is time for new leadership.
As I indicated in my previous letter, we will present you with all the
facts throughout the process of our seeking two board seats. We will treat you
with straightforwardness and integrity -- the way we would want to be treated if
our roles were reversed.
I look forward to communicating with you over the coming months to keep
you informed. I recommend that you periodically visit our recently launched
website -- enhancefriendlys.com -- for updates. Friendly Ice Cream is a great
brand, and the time has arrived to act with a sense of urgency to create
shareholder value. We are committed for the long term and dedicated to working
tirelessly to ensure the company's success. We look forward to serving YOUR best
interests.
Sincerely,
/s/ Sardar Biglari
Sardar Biglari
THIS COMMUNICATION IS NOT A SOLICITATION OF A PROXY WHICH MAY BE DONE ONLY
PURSUANT TO A DEFINITIVE PROXY STATEMENT. SHAREHOLDERS ARE ADVISED TO READ THE
PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO SOLICITATION OF PROXIES BY THE
LION FUND L.P., BIGLARI CAPITAL CORP., WESTERN SIZZLIN CORP. AND SARDAR BIGLARI
FROM THE SHAREHOLDERS OF FRIENDLY ICE CREAM CORPORATION, FOR USE AT ITS ANNUAL
MEETING OF SHAREHOLDERS WHEN AND IF THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. WHEN AND IF COMPLETED, A DEFINITIVE PROXY
STATEMENT AND A FORM OF PROXY WILL BE MAILED TO SHAREHOLDERS OF FRIENDLY ICE
CREAM CORPORATION AND WILL BE AVAILABLE AT NO CHARGE AT THE SECURITIES AND
EXCHANGE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. INFORMATION RELATING TO THE
POTENTIAL PARTICIPANTS IN A POTENTIAL PROXY SOLICITATION IS CONTAINED IN THE
SCHEDULE 13D FILED BY THE LION FUND L.P., BIGLARI CAPITAL CORP., WESTERN SIZZLIN
CORP. AND SARDAR BIGLARI WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST
7, 2006 WITH RESPECT TO FRIENDLY ICE CREAM CORPORATION, AS HERETOFORE AMENDED,
MOST RECENTLY ON DECEMBER 11, 2006. THAT SCHEDULE 13D, AS AMENDED, IS CURRENTLY
AVAILABLE AT NO CHARGE ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE.
Item 3: On or around December 11, 2006, Sardar Biglari delivered the
following letter to the Chairman of the Board of Directors of Friendly:
THE LION FUND, L.P.
9311 SAN PEDRO AVENUE, SUITE 1440
SAN ANTONIO, TEXAS 78216
TELEPHONE (210) 344-3400
FAX (210) 344-3411
SARDAR BIGLARI, CHAIRMAN
December 11, 2006
Mr. Donald N. Smith
Chairman of the Board
Friendly Ice Cream Corp.
1855 Boston Road
Wilbraham, Massachusetts 01095
Dear Don:
We are disappointed with the actions of the Board of Directors of
Friendly Ice Cream Corp. We do not believe the board offer of one board seat
encumbered with a number of stipulations (see Exhibit A) and with the obvious
objective of diluting our influence is good business, good judgment, or good
governance.
Subsequent to our acquisition of a large position in Friendly Ice Cream
Corp.'s common stock, both its bond and stock prices have risen to a level that
reflects the anticipation of change. Any offer that strips us of our rights we
must reject. The restrictions that the offer would impose on us include:
o An attempt to prevent us from engaging in transactions with
shareholders -- without board approval -- for a period of three years
after serving as directors.
o An attempt to require that for three years after serving as directors
we support and vote in favor of future proposals -- without knowing
what they are -- which would destroy our independence.
o An attempt to prevent us from supporting other shareholders in
opposition to any matter recommended by the board for three years after
serving as directors.
o An attempt to limit us to one board seat, which would hamper our
ability to foster intelligent discussion on the board by preventing us
from getting a second to our motions.
o An attempt to require our resignation if our ownership is reduced below
10% would subject us to a stipulation that does not apply to any other
director.
With the proposed restrictions, we would be marginalized as board
members, and shareholders will get more of the same - strategies that have
destroyed shareholder wealth. No other director has a financial stake in the
company as significant as ours, and all have failed thus far in their capacity
as stewards of shareholders' capital.
As the largest stockholder, we are not being unreasonable to ask for a
minority position on the board, namely two board seats. It is also most
unfortunate that the current board would rather cost shareholders more money to
fight a proxy battle that we are confident of winning, than having our two
nominees on the board. I make that statement not to impress you but rather to
impress upon you that shareholders are voicing their support. Our plan is to
help the company, and the cost of this battle, in our judgment, is not as great
as the potential losses we all could endure through more board errors of
omission and commission.
Dr. Philip L. Cooley -- Lion Fund director and Vice Chairman of Western
Sizzlin -- and I have the experience to serve knowledgeably and judiciously. We
would be constructive contributors on the board. Shareholders are intelligent
enough to realize that a fresh and sound perspective by financially committed
board members is essential after the company's dismal performance under the
current board's watch. Friendly's is too important to its shareholders and its
community for us not to pursue our two board seats without the handicap of
unreasonable restrictions.
We are principled in our pursuit, and we will not waver in our resolve.
Sincerely,
/s/ Sardar Biglari
Sardar Biglari
EXHIBIT A
FRIENDLY ICE CREAM CORPORATION
OUTLINE OF PROPOSED TERMS FOR SARDAR BIGLARI/THE LION FUND
BOARD REPRESENTATION
DECEMBER 7, 2006
O INCREASE SIZE OF BOARD; BIGLARI BOARD SEAT. The Company will expand the
size of the Board of Directors from five to seven members, increasing the
number of Class III Directors (term expiring in 2009) from one to three
members. The Class III members will consist of Don Smith; Biglari or a
mutually agreeable designee (the "Biglari Director"); and a designee
appointed by the present members of the Board of Directors. The Biglari
Director will be appointed effective five business days after the
execution of definitive settlement agreement.
O APPOINTMENT OF BIGLARI DIRECTOR TO AUDIT COMMITTEE. The Biglari Director
will be offered membership on the Company's Audit Committee, subject to
satisfaction of applicable qualification and independence standards.
O ADDITIONAL AGREEMENTS. For so long as the Biglari Director is serving on
the Board and for a period of three years thereafter, neither Biglari nor
any of his affiliates shall: (i) solicit or participate in, or support
others in, any solicitation of proxies in opposition to any matter
recommended by the Board, (ii) engage in any transactions with the
Company or its shareholders without the Board's consent, and (iii) use or
promote the use of the assets of the Company, directly or indirectly, to
purchase the securities or assets of any other company that is not
approved by a majority of the other directors. For the same period of
time, Biglari and his affiliates will support and vote in favor of
proposals recommended by the Board and slates of nominees for directors
recommended by the Board.
O RESIGNATION. The Biglari Director will immediately resign from the Board
if at any time his beneficial ownership of the Company's common stock is
reduced below 10% of the total number of shares outstanding.
O NO DISPARAGEMENT. The Company will agree not to disparage Biglari and his
affiliates, and Biglari and his affiliates agree not to disparage the
Company and its management.
O MUTUAL RELEASES. Biglari and his affiliates, on the one hand, and the
Company, on the other hand, will exchange mutual general releases (other
than for the parties' respective obligations going forward).
O DEFINITIVE AGREEMENT. This proposal is subject to the execution and
delivery of a mutually satisfactory definitive agreement containing the
terms set forth in this outline and such other provisions as the parties
may agree upon.
O NO WAIVER. The foregoing outline of terms shall not be deemed a waiver of
any rights or defenses that the Company may have against The Lion Fund,
Sardar Biglari, Philip Cooley or any of their affiliates, and the Company
reserves all of its rights.
Item 4: On or around December 4, 2006, Sardar Biglari delivered the
following letter to the shareholders of Friendly:
THE LION FUND, L.P.
9311 SAN PEDRO AVENUE, SUITE 1440
SAN ANTONIO, TEXAS 78216
TELEPHONE (210) 344-3400
FAX (210) 344-3411
SARDAR BIGLARI, CHAIRMAN
December 4, 2006
Dear Fellow Shareholder:
I want to express to you my concerns about Friendly Ice Cream Corp. and
its current Board of Directors. I represent a group (composed of The Lion Fund,
L.P., Biglari Capital Corp., Western Sizzlin Corp., and Sardar Biglari) that
owns approximately 15% of the outstanding common stock of Friendly's, making us
the largest shareholder of the company. We believe that now is a critical time
for Friendly's and that change must be made at the board level. However, our
efforts to discuss representation with the board have been fruitless. We are
therefore appealing to you, the owners of Friendly's.
The optimal avenue to achieve good corporate governance and to envision
wise means to enhance long-term value is to place very significant shareholders
on the board to ensure a proper alignment of interests between the board and the
shareholders.
Our concerns over Friendly's arise from its poor corporate governance,
poor operational performance, poor stock performance, and its weak balance
sheet. To illustrate, the company's escalating legal costs directly result from
poor judgment on corporate governance issues, which has led to extensive
litigation. Good corporate governance contributes to good corporate health. If
you are a long-term stockholder, you care about the health of the corporation,
which cares about all of its constituencies -- franchisees, employees,
creditors, customers, and shareholders. Good corporate health will support
long-term shareholder value creation, the ultimate objective of a company.
Friendly's must make better capital allocation decisions and improve its capital
structure if it is going to survive and then thrive.
Towards that end, our group intends to nominate Dr. Philip L. Cooley --
Lion Fund director and Western Sizzlin's Vice Chairman -- and me for election to
Friendly's board at the next annual meeting of shareholders to be held in 2007.
We are taking the pro-active approach because we believe it is time for change
at Friendly's and we see opportunities -- set in motion by sound change -- to
create tremendous value. We believe the company has not achieved its full
potential. But to reach that potential requires forward-looking leadership.
We seek alteration in the composition of the Board of Directors to
provide greater presence of directors who are autonomous and who therefore are
able to represent the best interests of all stockholders. As directors, Phil and
I would be technically and psychologically independent.
Over the coming months we will be communicating with you regarding our
ideas for Friendly's. Our Web site, www.enhancefriendlys.com, will be the prime
source of information that we will communicate to you on important matters. Our
guideline is to tell you the facts that we would want to know if our roles were
reversed. We are applying this principle in our communications with you now and
will apply no lower standard when we serve as stewards of your capital in our
role as board members. Shareholders are entitled to no lesser standards and
consideration; all shareholders of Friendly's should be treated equally. We
encourage shareholders to visit our Web site regularly and to share their
thoughts with us about Friendly's.
We look forward to serving your best interests.
Sincerely,
/s/ Sardar Biglari
Sardar Biglari
THIS COMMUNICATION IS NOT A SOLICITATION OF A PROXY WHICH MAY BE DONE ONLY
PURSUANT TO A DEFINITIVE PROXY STATEMENT. SHAREHOLDERS ARE ADVISED TO READ THE
PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO SOLICITATION OF PROXIES BY THE
LION FUND L.P., BIGLARI CAPITAL CORP., WESTERN SIZZLIN CORP. AND SARDAR BIGLARI
FROM THE SHAREHOLDERS OF FRIENDLY ICE CREAM CORPORATION, FOR USE AT ITS ANNUAL
MEETING OF SHAREHOLDERS WHEN AND IF THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. WHEN AND IF COMPLETED, A DEFINITIVE PROXY
STATEMENT AND A FORM OF PROXY WILL BE MAILED TO SHAREHOLDERS OF FRIENDLY ICE
CREAM CORPORATION AND WILL BE AVAILABLE AT NO CHARGE AT THE SECURITIES AND
EXCHANGE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. INFORMATION RELATING TO THE
POTENTIAL PARTICIPANTS IN A POTENTIAL PROXY SOLICITATION IS CONTAINED IN THE
SCHEDULE 13D FILED BY THE LION FUND L.P., BIGLARI CAPITAL CORP., WESTERN SIZZLIN
CORP. AND SARDAR BIGLARI WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST
7, 2006 WITH RESPECT TO FRIENDLY ICE CREAM CORPORATION, AS HERETOFORE AMENDED,
MOST RECENTLY ON NOVEMBER 22, 2006. THAT SCHEDULE 13D, AS AMENDED, IS CURRENTLY
AVAILABLE AT NO CHARGE ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE.
* * * *
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
The Lion Fund L.P. (the "Lion Fund"), together with the other
participants named herein, intends to make a preliminary filing with the
Securities and Exchange Commission ("SEC") of a proxy statement and an
accompanying proxy card to be used to solicit votes for the election of its
director nominees at the 2007 annual meeting of stockholders of Friendly Ice
Cream Corporation, a Massachusetts corporation (the "Company").
THE LION FUND ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE
PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO
CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE
PARTICIPANTS IN THE PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY
STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO
THE PARTICIPANTS' PROXY SOLICITOR, MORROW & CO., AT ITS TOLL-FREE NUMBER: (800)
607-0088.
The participants in the proxy solicitation are anticipated to be The
Lion Fund L.P., a Delaware limited partnership, Biglari Capital Corp., a Texas
corporation, Western Sizzlin Corp., a Delaware corporation, Sardar Biglari and
Philip L. Cooley (the "Participants").
Each of the Participants may be deemed to be the beneficial owner of
1,182,388 shares of Common Stock of the Company. The Participants specifically
disclaim beneficial ownership of such shares of Common Stock except to the
extent of their pecuniary interest therein.