Cara shareholder to fight takeover
A major shareholder Cara Operations has come out against a proposal from other members of his family to take the company private.
The proposal is "inadequate" and "clearly opportunistic," said Paul Phelan.
The company is worth a dollar more than the $7.625-a-share offer from Cara Holdings Ltd., so it "does not provide fair value to shareholders," and doesn't provide enough information or time for them to make an informed decision, he said.
Phelan owns about 18.4 per cent of the company's Class A stock, or about 9.8 per cent of all the company's shares.
Cara Holdings is controlled by Gail Regan, her sister Rosemary Phelan and their niece Holiday Phelan-Johnson.
It owns 79 per cent of Cara's common stock and 31 per cent of the Class A shares. Together, that's 53.5 per cent of all the stock.
The board backed the Cara Holdings offer, saying it was at the midpoint of a valuation that found the company was worth $7.25 to $8.25.
- FROM DEC. 17, 2003: Cara board backs higher bid
But using different assumptions, investment bankers Crosbie & Company Inc., hired by Paul Phelan, calculated the company is worth $8.25 to $9 a share.
Paul Phelan also complained that there was not enough disclosure of Cara's new contract with Air Canada, a key deal, and the Feb. 3 meeting to vote on the proposal falls just two days before the company is due to report third-quarter earnings.
That information would help shareholders assess the company's worth, he said.
Cara's wholly owned businesses include Swiss Chalet, Harveys', Second Cup, Kelsey's Neighborhood Bar & Brill, Montana's Cookhouse, and as a franchisee, Outback Steakhouse restaurants in Eastern Canada.
Cara's A shares closed down nine cents at $6.82 in trading on the TSX.