A major shareholder in Cracker Barrel Old Country Store Inc. is calling for the Lebanon-based restaurant and retail store to declare a special dividend of $20 a share.
Steak ‘N Shake owner Sardar Biglari said in a letter he plans to call for a special meeting of shareholders to vote on the request. Biglari’s holdings company owns nearly 20 percent of Cracker Barrel’s stock.
Biglari was spurned last month by Cracker Barrel in his third attempt to seek seats for himself and Biglari Holdings Vice Chairman Philip Cooley on its board of directors.
Biglari’s firm previously pressed proxy contests against Cracker Barrel in 2011 and 2012, both of which shareholders rejected by wide margins.
In his letter to the board Monday, Biglari criticized the group’s rejection and pushed for the special dividend. He said Cracker Barrel had amassed $58.5 million in cash and cash equivalents as of May 3. He said additional debt needed to fund the special dividend would bring the company's capital structure more in line with its peer group.
Cracker Barrel responded Tuesday with a statement it received the letter and would “respond to the letter in due course.”
Biglari also advised against opening new stores, accumulating more cash and repaying debt, calling such moves "asinine" owing to low returns on capital, low interest rates and a favorable refinancing environment.
Biglari said the company has been providing "mere lip service" and a media release "full of makeshift malarkey" regarding its shareholder-friendly moves, asserting Cracker Barrel's stock buybacks in the past two fiscal years were offset by shares issued to cover stockbased compensation for executives.
He also said he intends to take the matter to other shareholders as the 20-percent ownership stake carries the ability to demand a special meeting.
On Wednesday, Cracker Barrel plans to discuss its financial results for the quarter and fiscal year ending Aug. 2, as well as provide its outlook for fiscal 2014.