Lion Fund seeks shareholder support to push Friendly Ice Cream in new direction

By Lisa Kerner

Charlotte, N.C., March 6 - Sardar Biglari, chairman of the Lion Fund, LP, asked fellow Friendly Ice Cream Corp. shareholders to vote in favor of the nomination of Philip L. Cooley and himself to the company's board of directors.

The San Antonio-based Lion Fund owns 14.92% of the company's stock, or about 1.2 million shares.

In a letter to shareholders, Biglari expressed "deep concerns about Friendly Ice Cream Corp. as misgoverned by its chairman Donald Smith and its board of directors."

The letter was included as part of a schedule 13D filing with the Securities and Exchange Commission.

"Despite Mr. Smith's false allegation that we intend to control the board, we cannot do so because we are seeking only two board seats out of the entire six. Of course, we will reserve the ability to hold the board accountable in the future, and we will not forgo the right to seek further board changes if they are warranted and supported by shareholders," Biglari added.

Biglari said he and Cooley plan to "strenuously lobby" the board to focus on the company's cash flow as well as its debt service which Biglari likened to "a dagger pointed at the heart of the business."

According to the letter, Friendly's has paid more than $230 million in interest over the past decade and $620 million since 1988.

"We believe a board of directors should participate in the future of a company by making a substantial financial commitment on the same basis as other shareholders do. Presently, five of the six board members have virtually no stake in the company, while our stock ownership exceeds the aggregate of all six directors," Biglari said in the letter.

Biglari also raised concerns about "badly designed compensation systems to the costly, unneeded use of a private jet" in his communication to Friendly's shareholders.

In his previous Jan. 2 letter included in an SEC filing, Biglari cited the lack of shareholder value since Friendly's went public a decade ago at $18 per share.

Friendly's is a restaurant company based in Wilbraham, Mass.

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