Ramius seeks support from Luby's shareholders for board nominees

By Lisa Kerner

Charlotte, N.C., Dec. 21 - In a bid to garner shareholder support for its slate of nominees, Ramius Capital Group, LLC sent a second open letter to Luby's, Inc. stockholders citing the "company's need for highly qualified, independent board members who will represent shareholders' best interests."

Luby's annual meeting is set for Jan. 15.

"Luby's nominees have limited to no restaurant experience and are not the best choice to oversee the company during this difficult period," Ramius partner Jeffrey Smith said in a statement released on Friday.

"With Luby's management team splitting its time between Luby's and Pappas Restaurants, and a new growth phase about to be implemented at the company, Luby's needs an experienced board with industry knowledge and insight to assist management now more than ever."

According to Smith, Ramius' independent nominees have proven track records with "significant restaurant and corporate finance expertise."

Ramius' nominees are:

• Stephen Farrar, former senior vice president, Western Region of Wendy's International, Inc.;

• William J. Fox, a certified public accountant, business adviser and strategy consultant, formerly executive chairman of the board of Nephros, Inc.;

• Brian G. Grube, former chief executive officer and president of Baja Fresh Mexican Grill, a subsidiary of Wendy's; and

• Matthew Q. Pannek, former president and CEO of Magic Brands, LLC and Fuddruckers, Inc.

In its letter, Ramius pointed out that Luby's same-store sales have declined for the last three quarters and gross margins have declined by 160 basis points from the fourth quarter of 2006 to the fourth quarter of 2007, all against a backdrop of increasing food and payroll costs.

Current Luby's directors up for re-election to the board are:

• Judith Craven, retired president of the United Way of the Texas Gulf Coast;

• Arthur Emerson, chairman and CEO of GRE Creative Communications;

• Frank Markantonis, an attorney whose principal client is Pappas Restaurants; and

• Gasper Mir, III, owner of a public accounting firm. He is the current chairman.

Luby's, in its statement, accused Ramius of misrepresenting the qualifications of Luby's board as well as Ramius' nominees seeking election.

"Luby's board of directors is comprised of independent, diverse and open-minded business and community leaders who are, and always have been, focused on creating value for all Luby's shareholders," the statement said.

Ramius' nominees "lack relevant experience with respect to Luby's business model and industry segment," according to Luby's.

Luby's also said that Ramius' nominees "have financial arrangements with Ramius which compromises their independence and commitment to serving the interests of the company and all Luby's shareholders."

Earlier in December, Luby's urged its shareholders to vote for its directors and called Ramius a "notorious dissident shareholder activist" and a short-term investor "whose interests are clearly not aligned with those of all Luby's shareholders."

Ramius is pushing "a financial releveraging scheme of the company's balance sheet through the sale and leaseback of the company's owned real estate," Mir said in a prior news release.

Luby's is a Houston-based restaurant operator.

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