Bandera Partners Urges Luby's Stockholders to Vote for Change – Business Wire


NEW YORK–()–Bandera Partners LLC, a significant stockholder of Luby’s Inc. (NYSE:
LUB), issued the following statement and letter to stockholders.

Luby’s underperforming Board of Directors, which has overseen an 84%
stock price collapse in the five years leading up to Bandera’s
nomination letter
, yesterday sent a letter to stockholders filled
with falsehoods and inaccuracies. The incumbent Board specifically
targeted Bandera Portfolio Manager Jeff Gramm, who today sent the
following letter to Luby’s stockholders, setting the record straight and
asking for your support by voting the GOLD Proxy to improve and refresh
the Board of Directors:

January 11, 2019

Dear Fellow Luby’s Stockholder,

As Luby’s January 25th Annual Stockholder Meeting approaches,
I want to thank every owner that has taken time to consider Bandera’s
minority slate of nominees to the Board of Directors. By my estimates, I
have recently interacted with owners of 68% of the Luby’s
shares not controlled by Bandera or the incumbent Board. I’m grateful
for the outpouring of support for our message that Luby’s poor
stewardship of your capital necessitates immediate change to the Board
of Directors.
In the coming weeks, I look forward to speaking with
the rest of you. Whether you side with our slate or not, this is what
shareholder democracy is about—bringing power to shareholders to seek
change if they believe it is warranted. If our minority slate is
elected, this will be a historic win that sends a message to all public
company investors that their vote can make a difference.

Yesterday, Luby’s incumbent Board published a letter asking you to
reject Bandera’s nominees, and let the Company continue down its worn
path of value destruction. I was disturbed by the distortions and
falsehoods leveled at our slate. In a desperate attempt to distract your
attention from the Company’s prolonged, dismal performance, the
incumbent Board has embraced the politics of destruction with a barrage
of personal attacks on our accomplished nominees. This is a cynical
tactic that smacks of desperation, and, in my opinion, it will not sway
Luby’s stockholders.

Luby’s wants you to believe that our four nominees, 1) a
highly-respected former United States Senator with a sterling record and
reputation, 2) the CEO of a public company almost ten times Luby’s size,
3) a Texas gubernatorial appointee, and 4) a five-time public company
director, are unfit to serve on “any public company board.” Does the
incumbent Luby’s Board think you were born yesterday?

In yesterday’s misleading stockholder letter, Luby’s incumbent Board
stated that Tandy Leather stock was down 76% since I joined its board of
directors. Whether it was a convenient typo or a troubling attempt to
fool stockholders, that number is absolutely false. What should
really concern YOU is that Luby’s stock was down 79% over that same
period.

If Luby’s wants to tout Tandy as proof that Bandera can’t benefit
stockholders by bringing accountability to the Luby’s Board, please
examine these numbers:

   

TANDY LEATHER

   

LUBY’S

 
MARKET CAPITALIZATION $53 Million $46 Million
 
SENIOR MANAGEMENT COMPENSATION $1.0 Million $2.4 Million
(Source: Most Recent Proxy Filing)
 
BOARD MEMBER CASH FEES $16,000 – $18,000 $65,000
(Includes committee member fees)
 
CHAIRMAN OF THE BOARD TOTAL COMPENSATION $31,250 $109,252
(Source: Most Recent Proxy Filing)
 
AUDIT FEES $104,250 $794,000
(Source: Most Recent Proxy Filing)
 
NET INCOME INCOME OF $4,263,517 LOSS of $33,568,000
(Last Twelve Reported Months)
 
CASH FROM OPERATIONS POSITIVE $5,731,505 NEGATIVE $8,453,000
(Last Twelve Reported Months)
 
CASH RETURNED VIA DIVIDENDS AND REPURCHASES $10,929,438 ZERO
(Since 2/11/14 when Gramm joined Tandy Board)

During Bandera’s tenure as directors of six public companies, we have
returned almost $250 million to stockholders in special distributions,
share repurchases, cash acquisition and liquidation proceeds. Over the
same period, Luby’s has returned no capital to its stockholders.

Luby’s has also accused me of “wildly exaggerating” my track record. In
fact, I did propose and lead the Denny’s equity
recapitalization in question. In 2004, Thomson Media’s High Yield Report
stated, “Shrock and Gramm played a central role in the Mellon HBV-led
Denny’s Corp private equity placement as well as the subsequent
recapitalization of the company’s debt.” Denny’s CFO Andrew Green added,
“Very early in the process, they recognized the intrinsic value of
Denny’s and I give them a lot of credit for that.” Mellon HBV’s $35
million investment would today be worth $350 million, seven times Luby’s
entire valuation. The Luby’s Board, by contrast, has sunk hundreds of
millions of dollars of your capital into its restaurant base with ZERO
return for stockholders.

Luby’s scorched earth campaign of falsehoods, distortions and personal
attacks does not add up. Why is Luby’s so afraid of fresh, qualified
candidates taking a minority position on the Board of Directors, and
bringing new perspectives to a business badly in need of help?
Yes,
I have harsh words for the Luby’s directors’ stewardship of your capital
– I think their performance deserves those harsh words – but we have not
engaged in cynical personal attacks like what we are seeing from Luby’s.
Before questioning Phil Gramm’s track record and asserting he is unfit
to serve on any board, Luby’s CEO Christopher Pappas contributed money
to his campaign for President of the United States.

In the end, YOU are the owners of the company and the arbiters of
this dispute. Whether you are a retail owner of 50 shares or a large
institutional fiduciary with trillions of dollars under management, your
vote counts!
I encourage you to ignore all of Luby’s distracting
personal attacks and focus on the facts. The incumbent Luby’s Board has
sunk hundreds of millions of dollars of your capital into the Luby’s and
Fuddruckers restaurant concepts with disastrous returns. They have sold
valuable real estate and burdened the company with a large and expensive
debt load that will necessitate future property sales. Year after year,
Luby’s Board has failed to live up to its promises to turn the company
around, and the value of your investment shrinks and shrinks.

If you want to see changes at Luby’s Board of Directors, please vote
only the GOLD PROXY CARD. If you want to support our nominees, please do not vote
any white proxy cards from the Company, even if you vote against the
current Board. If you vote against or abstain on a white proxy after voting
the GOLD PROXY, your GOLD PROXY vote for us is eliminated. Only your
most recent vote counts.
 If you have any questions about our slate
of nominees, please call me at 212-232-4583.

Sincerely,

Jeff Gramm

About Bandera Partners

Bandera Partners is a value-oriented hedge fund based in New York.



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