Feb. 28, 2014
/PRNewswire/ -- Concerned Pantry Shareholders ("CPS"), a group led by JCP Investment Management, LLC and Lone Star Value Management, LLC, together a significant shareholder of The Pantry, Inc. ("The Pantry" or the "Company") (NASDAQ: PTRY), announced today that Glass Lewis & Co. ("Glass Lewis"), a leading proxy advisory firm, has recommended that Pantry shareholders vote on the
proxy card to elect all three of CPS's highly-qualified nominees,
at the upcoming annual meeting on
of JCP Investment Management and
of Lone Star Value Management stated, "Glass Lewis has strongly recommended much-needed change to the Pantry Board and for shareholders to vote on the
proxy card. Importantly, a leading independent proxy voting advisory firm has recognized the sustained underperformance of Pantry and compelling case for a better plan to build The Pantry into a stronger, more profitable and ultimately more valuable company. We greatly appreciate the strong support from shareholders who have already voted for CPS's nominees on the
proxy card and urge all of our fellow shareholders to vote their
to elect all three of our director nominees who are firmly committed to the future success of The Pantry."
In reaching its conclusion, Glass Lewis, performed a detailed analysis of both sides' positions in the election contest and, in particular, carefully considered, among other things, the Company's poor total shareholder return and operating performance, unresponsiveness to governance concerns, as well as the strong experience and qualifications of CPS's nominees. Glass Lewis concluded that shareholders should
vote on the Gold proxy card
"With these expectations in mind, we believe the Dissidents have submitted a clear and cogent case in favor of the benefits prospectively realized through a measured degree of board-level turnover. Indeed, with limited space for rebuke, we believe JCP and Lone Star fairly highlight the fact that Pantry has lagged its peers by nearly any reasonable standard of value or performance, a straightforward argument management and the board largely sidestep in favor of absolute observations of granular metrics and dubious contest rhetoric. In our view, such a rebuttal speaks very little to the fundamental premise at play here: the Company's poor operating metrics, questionable investment program and lack of a cohesive strategy -- as underpinned by some fair degree of management continuity -- invite a considerable degree of scrutiny and support the notion that all investors would benefit from a fresh perspective at the board level."
Excerpts from Glass Lewis' Analysis & Recommendation
On The Pantry's Chronically Poor and Deteriorating Total Shareholder Return:
"…the conclusions that could reasonably be derived from the presented data are starkly unfavorable to Pantry. In sum, the Company lags all indices and any composite assemblage of peers over any time-frame, including a gap of 416% between Pantry and a composite peer group comprised of Susser Holdings Corporation, Alimentation Couche-Tard, Inc. and Casey's General Stores, Inc. for the five-year period ended
February 11, 2014
. Shorter time periods hardly lend a more favorable perspective, as the Company's trailing one-year performance -- which, for the sake of clarity, is wholly contained within
two-year tenure as CEO -- lags the same peer set by approximately 31%.
On The Pantry's Poor Capital Allocation:
"Perhaps most notably, JCP and
point to Pantry's
cumulative investment in CapEx and various acquisitions over a ten-year period, which investment has, to date, yielded a mediocre
gain -- or 16.8% -- in reported EBITDA (FY2004 to FY2013). In contrast, Pantry's closest peers posted average EBITDA growth of approximately 316.7% over the same period. In our view, this performance supports the notion that very little tangible value has been derived from management and the board's historical efforts to allocate capital to attractive, value maximizing projects.
Moreover, such a track record hardly dovetails with the linchpin of the board's forward strategy, which makes extensive reference to prudent capital management and rigorously evaluated investment decisions associated with new stores, remodels and quick service restaurant agreements
On The Pantry's High Debt Level and Poor Performance under the Watch of the Current Board:
"As a corollary impact of such a protracted period of costly, low-return investments, we see Pantry's relative debt position --on a total debt-to-EBITDA basis -- has significantly increased such that the Company's leverage ratio is now more than two times greater than the highest level posted by Pantry's closest peers."