El Pollo Loco Holdings, Inc. Adopts Limited-Duration Shareholder Rights Plan
09 August 2023 - 1:00PM
El Pollo Loco Holdings, Inc. (“El Pollo Loco” or the “Company”)
(Nasdaq: LOCO) today announced that its Board of Directors has
unanimously adopted a limited-duration shareholder rights plan
(“Rights Plan”) to protect the best interests of all El Pollo Loco
shareholders. The Rights Plan is effective immediately and will
expire on August 7, 2024. The Board may consider an earlier
termination of the Rights Plan if circumstances warrant.
The limited-duration Rights Plan was adopted in response to the
rapid and significant accumulation of El Pollo Loco stock by
Biglari Capital Corp. (together with its affiliates, “Biglari
Capital”). Biglari Capital initially disclosed that it had acquired
approximately 9.1% of the Company’s outstanding shares in a
securities filing on July 28, 2023. Pursuant to a securities filing
made yesterday, Biglari Capital disclosed that exactly one week
later, on August 4, 2023, it had already increased its ownership in
the Company beyond 10%, and as of August 8, 2023, it held 11.3%
(which represents over 12% of the Company after taking into account
the repurchase announced yesterday). In adopting the rights plan,
the Board noted that Biglari Capital has a track record of
acquiring substantial and sometimes controlling interests in public
restaurant companies.
The Rights Plan is intended to enable the Company’s shareholders
to realize the long-term value of their investment, ensure that all
shareholders receive fair and equal treatment in the event of any
proposed takeover of the Company, and to guard against tactics to
gain control of the Company without paying all shareholders an
appropriate premium for that control. The Rights Plan applies
equally to all current and future shareholders and is not intended
to deter offers or preclude the Board from considering offers that
are fair and otherwise in the best interest of the Company’s
shareholders.
“El Pollo Loco’s Board is committed to protecting our
shareholders,” said William R. Floyd, Chair of the Board. “The
adoption of this Rights Plan is intended to ensure that
shareholders are able to realize the full potential of their
investment in the Company and to prevent any third party from
obtaining control of El Pollo Loco in a manner and at a price that
are not in the best interests of the Company’s shareholders.”
The Rights Plan is similar to plans adopted by other publicly
traded companies. Pursuant to the Rights Plan, El Pollo Loco is
issuing one right (“Right”) for each share of common stock as of
the close of business on August 18, 2023. The Rights will initially
trade with El Pollo Loco common stock and will generally become
exercisable only if any person (or any persons acting as a group)
acquires 12.5% or more of the Company’s outstanding common stock
(the “triggering percentage”). The Rights Plan does not aggregate
the ownership of shareholders “acting in concert” unless and until
they have formed a group under applicable securities laws. If the
rights become exercisable, all holders of rights (other than any
triggering person) will be entitled to acquire shares of common
stock at a 50% discount or the Company may exchange each right held
by such holders for one share of common stock. Under the Rights
Plan, any person which currently owns more than the triggering
percentage may continue to own its shares of common stock but may
not acquire any additional shares without triggering the Rights
Plan. Except as provided in the Rights Plan, the Board is entitled
to redeem the rights at $0.001 per right.
Further details about the Rights Plan will be contained in a
Form 8-K to be filed by El Pollo Loco with the SEC.
Spotlight Advisors, LLC is serving as strategic advisor and
Kirkland & Ellis LLP is acting as legal advisor to El Pollo
Loco.
About El Pollo Loco
El Pollo Loco (Nasdaq:LOCO) is the nation’s leading fire-grilled
chicken restaurant chain renowned for its masterfully
citrus-marinated, fire-grilled chicken and handcrafted entrees
using fresh ingredients inspired by Mexican recipes. With more than
490 company-owned and franchised restaurants in Arizona,
California, Nevada, Colorado, Texas, Utah, and Louisiana, El Pollo
Loco is expanding its presence in key markets through a combination
of company and existing and new franchisee development. Visit us on
our website at ElPolloLoco.com.
Forward-Looking Statements
Statements in this release contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements include without limitation statements
relating to the effects and intended benefits of the Rights Plan,
as well as other statements representing management’s beliefs about
future events, transactions, strategies, operations and financial
results. Any statements that are not statements of historical fact
(including statements containing the words “believes,” “plans,”
“anticipates,” “expects,” “intends” or “estimates” or similar
expressions) should also be considered to be forward-looking
statements. Forward-looking statements are based on the Company’s
current assumptions regarding future business and financial
performance. These statements, by their nature, address matters
that are subject to risks and uncertain to different degrees. These
statements involve a number of factors that could cause actual
results to differ materially. The factors that may cause actual
outcomes to differ from the forward-looking statements herein
include without limitation the risk factors discussed in the “Risk
Factors” section of the Company’s Form 10-K, filed with the
Securities and Exchange Commission (the “SEC”) on March 10, 2023,
as such factors may be updated from time to time in the Company’s
periodic filings with the SEC. Copies of the Company’s Form 10-K
and other periodic filings are available from the SEC or from the
Company’s website. The forward-looking statements included in this
release are made only as of the date hereof. The Company undertakes
no obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except as required by law. If the Company does update
one or more forward-looking statements, no inference should be made
that the Company will make additional updates with respect to those
or other forward-looking statements. The Company qualifies all of
its forward-looking statements by these cautionary statements.
Investor Contact:
Jeff PriesterICRInvestors@elpolloloco.com
Media Contact:
Carmen HernandezEdibleEPL.Media@Edible-Inc.com
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