'Dissident' Group Makes Case for Changes to The Pantry's Board

Not looking for control, only a voice

Steve Holtz, Editor in Chief, CSP Daily News

'Dissident' Group Makes Case for Changes to The Pantry/Kangaroo Express’ Board

CARY, N.C. -- In a new filing with the Securities and Exchange Commission, the “dissident” group of investors looking to place its own candidates on the board of directors of The Pantry/Kangaroo Express made its case to shareholders in a proxy statement this week.

Concerned Pantry Shareholders (CPS) says it “is a group of independent stockholders of Pantry that was formed for the purpose of seeking to unlock value at Pantry. … We believe there is significant value to be realized at Pantry. However, we are concerned that the board is not taking the appropriate action to address the company’s perennial underperformance and unlock value for the benefit of all stockholders.”

In the statement mailed to all shareholders of The Pantry, CPS states it is not seeking control of the board.

“If elected, our nominees will represent a minority of the members of the board, which is currently composed of nine members, and therefore it is not guaranteed that they will have the ability to enhance stockholder value,” the group said. “Our nominees are committed to working constructively with the other members of the board to help reexamine the company’s current strategy and focus on specific opportunities to enhance value for stockholders.”

Those board candidates’ goals, if elected, will be to:

  • Explore opportunities to monetize the company’s valuable real-estate assets.
  • Focus on long-term opportunities to expand the quick-service restaurants initiatives under the oversight of directors with meaningful restaurant experience.
  • Reduce the company’s debt.
  • Improve capital allocation strategy and returns on invested capital.
  • Reduce remodeling costs and shrink general and administrative (G&A) expenses.
  • Focus on identifying and executing on incremental opportunities to drive additional revenue.

CPS, a group led by JCP Investment Management LLC and Lone Star Value Management LLC, launched its effort in late summer.

The Pantry responded in January by saying the current “board of directors and management team are committed to acting in the best interests of the company and all stockholders. We seek to maintain an open dialogue with stockholders and have spoken with representatives of the dissident group on several occasions to understand their thoughts. After carefully evaluating several individuals put forward by the dissident group, we have determined that they do not possess the particular experience and expertise that the company is seeking in director candidates at this time.”

The board member election will be finalized at the annual meeting of Pantry investors, which is scheduled for mid-March.

Based in Cary, N.C., The Pantry is a leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated convenience store chains in the country. As of Jan. 23, 2014, the company operated 1,537 stores in 13 states under select banners, including Kangaroo Express, its primary operating banner.

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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