Lone Star Steakhouse to Pursue Sale Leaseback of Restaurants?

Kansas City Star - August 31,2006

The planned sale of Lone Star Steakhouse & Saloon Inc. has stirred complaints from a substantial owner, even as directors cite a litany of problems to urge a sale. On Wednesday, Barington Capital Group LP in New York, which represents owners of 9.4 percent of Lone Star Steakhouse, complained that the deal fails to provide adequate value to the company's stockholders.

Shareholders are being asked to sell the company for $27.10 a share, or about $613 million. The would-be buyer is Dallas-based Lone Star Funds, a private equity group that is not related to the Wichita-based chain of restaurants.

Barington noted in a statement filed at the Securities and Exchange Commission that Lone Star shares had traded higher than the deal’s price less than three months before directors accepted the offer.

Barington said its own analysis showed the deal does not reflect the value of real estate Lone Star Steakhouse owns or its upscale Sullivan’s and Del Frisco’s restaurants.

(According to the company's 2006 10-K filing, the company owned 154 of its restaurants with a book value of $303 million.) Sphere: Related Content