Shareholder spat at The Restaurant Group hots up as investors demand improvement
The Restaurant Group (TRG) came under increasing pressure today after its second largest shareholder, Oasis, doubled down on its demands to immediately improve the firm’s struggling share price.
Oasis, which has a 6.5 per cent stake in TRG, has argued that the chain needed an “immediate” change of governance because it had “one of the worst performing share prices of any UK leisure company”.
Oasis also said that the group’s losses are “materially worse than its closest peers, and disproportionately worse than what the impact of the challenging sector backdrop would alone justify”.
In response, TRG, which also owns Frankie & Benny’s, said that the group had proved to be “resilient” in the face of the pandemic.
But today, Oasis group hit back, criticizing TRG’s profitability and lack of engagement with shareholders.
It slammed the hospitality group’s decision not to issue any trading information on its performance since its interim results in September last year, and demanded increased transparency.
Oasis said that longer-term shareholders continue to suffer, losing 93 per cent since 2015 and are currently receiving “no dividends, buybacks or capital appreciation”.
“Rather than acknowledge the existence of any longer-term underperformance, the Board’s sole response is to refer to the intervening impact of the pandemic,” Oasis said in a statement.
“Without such recognition, shareholders can have no confidence in the Board’s ability to remedy the situation and drive shareholder value growth, which serves only to demonstrate the need for increased Board accountability.”
“More of the same ruinous and devastating share price performance is not an option – failure by the Board to recognise and work with stakeholders who are committed to TRG’s future will leave shareholders with no recourse but to seek to hold TRG’s representatives to account,” the group said.
Commenting on the shareholder spat, Jonathan De Mello, founder and chief executive of JDM Retail, told Morning Wire that action was potentially necessary to help improve the firm’s share price.
“Oasis only own 6.5 per cent in TRG, but they are certainly the loudest voice in the room at the moment,” De Mello said.
“Potential divestment of the weaker performing chains, or a significant tranche of the less profitable restaurants within those chains, could go some way towards mollifying Oasis,” he said. “Such drastic action is possibly needed if the share price is to be turned around.”