Biglari Insists On A Special Dividend From Cracker Barrel Old Country Store, Inc. (CBRL)

A market-moving update, Biglari Capital Corp., a subsidiary of Biglari Holdings Inc (NYSE:BH), disclosed in an amended 13D filing with the Securities and Exchange Commission that it is negotiating with Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) regarding the declaration of a special dividend, which amounts to $20 per share.

The CEO and Chairman of Biglari Holdings, Sardar Biglari, is one of the largest shareholders in Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), holding 4.7 million shares, equivalent to almost 20% of the company. At the same time, through a letter sent to the company, Biglari said that it advises against using company’s surplus of cash for accumulating cash, debt repayment or opening of new stores. “After incurring additional indebtedness to finance the proposed special dividend, Cracker Barrel would have a capital structure more appropriate to its business. Net debt would be around $800 million for a real estate, restaurant, and retail company with over $1 billion worth of real estate. Moreover, the cash flow coverage, in our view, would be more in line with that of its peer group,” Biglari added.

Jim Simons’ Renaissance Techonologies, Israel Englander’s Millennium Management, and Gotham Asset Management, managed by Joel Greenblatt, are also bullish on the restaurant chain.

Here’s the full letter from Biglari, and here’s a quote we’ll leave you with from the actual filing:

Don’t do us owners any more favors by issuing stock options and grants at one price and then turning around and buying them back at an even higher price. Selling low and buying high is unwise; touting it as wise is mere idiocy.

Ouch.

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Disclosure: none