Sends Letter to Shareholders and Files Investor Presentation
CARY, N.C.--(BUSINESS WIRE)--
The Pantry, Inc. (NASDAQ:PTRY), a leading independently operated
convenience store chain in the southeastern U.S., today announced that
it has commenced the mailing of its definitive proxy materials in
connection with the Company's 2014 Annual Meeting of Stockholders, to be
held on March 13, 2014. The Pantry stockholders of record as of January
16, 2014, are eligible to vote at the 2014 Annual Meeting. The Pantry
Board of Directors recommends stockholders vote "FOR" the Company’s nine
highly qualified and experienced director nominees.
The Pantry has filed an investor presentation with the Securities and
Exchange Commission ("SEC"). The presentation is available on the
Company’s website at www.thepantry.com.
In addition, the Company issued the following letter to stockholders:
Dear Fellow Shareholder,
We are writing to you today regarding The Pantry’s upcoming Annual
Meeting of Stockholders, which will be held on March 13, 2014. At or
prior to the meeting, you will be asked to make an important decision
regarding your Company’s future. We urge you to protect the value of
your investment in The Pantry by voting the enclosed WHITE proxy
card today FOR The Pantry’s nine highly qualified and experienced
director nominees: Robert F. Bernstock, Thomas W. Dickson, Wilfred A.
Finnegan, Kathleen Guion, Dennis G. Hatchell, Edwin J. Holman, Terry L.
McElroy, Mark D. Miles and Thomas M. Murnane.
Your Board of Directors and management team are focused on creating
value for all stockholders of The Pantry through the continued
implementation of our strategy, which balances prudent cost management
with targeted initiatives to strengthen The Pantry’s presence in
high-value, high-demand markets. Since 2012, when your Board installed
the Company’s leadership team led by President and CEO Dennis Hatchell,
The Pantry has successfully executed plans to improve performance and
unlock the potential of our powerful convenience store platform. We have
made significant progress and we are confident that The Pantry is well
positioned for continued growth and success.
A dissident stockholder group, led by JCP Investment Management, LLC, is
seeking to replace certain members of your Board with a few handpicked
nominees. Consistent with its fiduciary duty, your Board is always open
to considering qualified director candidates. In fact, as was clearly
communicated to the dissident stockholders, your Board is currently
seeking an additional director with significant senior management
experience in the fuels area to assist the Board in its oversight of
this important area. After evaluating the individuals that the dissident
group has put forth, your Board concluded that none of the dissident
group’s nominees possess the particular experience and expertise
required to serve on The Pantry’s Board at this time or to further the
interests of all stockholders.
The Pantry’s Board of Directors unanimously recommends that
stockholders vote “FOR” the Company’s director nominees today by
telephone, online, or by signing and dating the enclosed WHITE proxy
card and returning it in the postage-paid envelope provided.
THE PANTRY HAS BEEN SUCCESSFULLY EXECUTING A CLEAR STRATEGY
TO DRIVE STOCKHOLDER VALUE
In March 2012 we appointed Dennis Hatchell, an industry veteran with
more than 40 years of retail and distribution experience, as President
Since Mr. Hatchell’s appointment, we have significantly strengthened
our bench of executive talent with the addition of a new CFO, Chief
Merchandising Officer and VP of Real Estate and Business Development.
Most recently, we appointed a Chief Information Officer in January
2014 to ensure that The Pantry operates at the forefront of
technological innovation in its industry.
Following an in-depth strategic and operational review that culminated
in October 2013, the Company’s leadership, with the support of a
globally recognized consulting firm, identified key areas of focus
through which to create meaningful value for our Company and all
stockholders, including sales growth initiatives, strategic store
enhancements, acquisitions and thoughtful expense management. The
Pantry’s Board and management team have acted on these key focus areas
and implemented a number of changes to position the Company for
sustained, profitable growth. Highlights of The Pantry’s accomplishments
Attracted leading talent to The Pantry to further strengthen our
operational management. Beginning with the appointment of our
current CEO, we have taken decisive action to ensure we have a
best-in-class management team with the insights and experience to grow
the Company and create stockholder value.
Increased same-store sales through an enhanced merchandise mix and
effectiveness.The Pantry has refocused its merchandising strategy
to emphasize localization and targeted advertising and promotions:
We have implemented local merchandising programs in more than 900
stores across our footprint.
We are driving sales increases through the use of more consistent and
competitive fuel and cigarette pricing, localized product offerings
and initiatives designed to increase traffic from the pump to the
Invested in technology to support pricing optimization. The
Pantry has made strategic investments in technology and cost management
tools in order to improve fuel pricing and minimize the impact of
We have implemented state-of-the-art fuel pricing software and have
installed electronic fuel price signs in nearly 1,000 stores, with
plans to add 150 more in fiscal 2014.
We continue to make investments to support price optimization
throughout the Company’s footprint.
Prudently managed expenses and reduced debt. The Pantry’s Board
and management team have steadily reduced costs throughout the
organization, giving us a stronger balance sheet and providing
additional liquidity to reinvest in our business.
We reduced OSG&A costs by $23 million since 2010, a reduction of 1.4%
of OSG&A as a percentage of merchandise sales, and successfully
renegotiated fuel hauling agreements to reduce costs.
Our balance sheet has also benefited from the reduction of nearly $368
million of debt since 2008, including $72 million in fiscal 2013 alone.
As of December 2013, The Pantry had substantial liquidity (cash and
available credit lines) amounting to $174 million, with no near-term
Significant store remodeling program, enhanced proprietary
foodservice and added quick-service restaurants in existing stores.
The Company has a significant remodel program underway and is rapidly
increasing its number of quick-service restaurants (QSRs).
The remodels support our plans to grow proprietary foodservice revenue
and, when combined with the QSR additions, to expand our overall mix
in the high-growth, high-margin foodservice category.
In fiscal 2013 the Company completed 72 store remodels and opened
eight new QSRs. The Company intends to build on this momentum into
2014 with additional remodels and more than 20 QSR build-outs.
Utilized new store opportunities and acquisitions to accelerate
growth and strengthen The Pantry’s competitive position in key markets.
Consistent with the Company’s disciplined capital deployment strategy,
the Board and management team are pursuing selective growth
opportunities that will enhance the Company’s presence within its
primary footprint, enhance free cash flow and produce valuable operating
Over the last two years, the Company has invested approximately $38
million, representing nearly 92% of total growth capital (i.e.,
remodel, new store and QSR capital), in strengthening its position in
Since February 2013, the Company has opened four new stores and is
actively seeking additional high-potential sites for growth.
The Company’s recent performance clearly demonstrates that this strategy
is working and delivering results. Among other things, the Company’s
Positive growth in same-store merchandise sales for eight of the last
nine quarters, as average revenue per customer has steadily improved;
Rapid growth in proprietary foodservice revenue;
Implementation of management disciplines and technology to
aggressively address our fuel market share underperformance; and
Steady reduction of total debt.
The Pantry’s leadership has the right vision for a successful future,
and is pursuing the right opportunities for growth through a thoughtful
balance of investment and cost management. Under the direction of an
outstanding management team and the oversight of an engaged and
knowledgeable Board, the Company is solidly positioned to continue
delivering results and creating value for all stockholders.
THE PANTRY HAS A HIGHLY QUALIFIED, INDEPENDENT BOARD
COMMITTED TO SERVING THE INTERESTS OF ALL STOCKHOLDERS
Eight of the Company’s nine nominees are independent (with the only
non-independent nominee being the Company’s CEO);
Separate Chairman and CEO roles;
All directors stand for election annually;
No stockholder rights plan;
Strict stock ownership guidelines for independent directors and
All Board committees (audit, nomination and compensation) are
comprised of 100% independent directors and none of the Company’s
nominees serve on more than two other public company boards; and
Your Board and management team collectively beneficially own 4.7% of
the Company’s stock, ensuring that our interests are aligned with
those of all stockholders.
Your Board has nominated nine highly qualified directors who together
possess significant retail, convenience store, consumer packaged goods,
foodservice and financial experience that is highly relevant and
critical to the business. Of the nine nominees, eight have direct
experience working in the retail and/or convenience store industries,
and seven have executive management experience at Fortune 500 companies.
Included in your Board’s slate of nine highly qualified nominees for
election at the Annual Meeting is Thomas W. “Tad” Dickson, who most
recently served as Chairman and CEO of Harris Teeter Supermarkets, a
leading food retailer in the southeastern United States with 216 stores
and $4.1 billion of revenue. Tad brings nearly two decades of
operational and management experience in the supermarket industry. His
significant retail experience in the southeastern U.S makes him highly
qualified to serve as a member of your Board.
The Pantry is committed to adhering to best practices in corporate
governance, as evidenced by:
THE DISSIDENT GROUP’S NOMINEES SHOULD NOT BE ELECTED
TO SERVE ON YOUR BOARD OF DIRECTORS
Your Board and management team are committed to maintaining an open
dialogue with investors and regularly consider a wide range of options
to enhance stockholder value. Since we first became aware of the
dissidents’ interest in The Pantry, members of your Board and management
team met and spoke with representatives of the dissident group on
several occasions in order to better understand their perspective. Your
Board also carefully considered the director nominees put forth by the
dissident group (and offered to interview one previously put forth) and
concluded that the dissident group’s nominees lack the skill or
experience required to serve on your Board and represent the best
interests of all stockholders at this time. The dissident group has
been unable to demonstrate how their director nominees would do anything
to improve the value of your Pantry investment.
From a strategic perspective, the dissident group has also shown that it
would rather create problems than propose solutions. Despite our
repeated attempts to engage with the dissident group to better
understand their views as to how they might propose to enhance value for
all stockholders, to date the dissident group has not provided any
constructive suggestions about improvements to the Company’s strategy.
Do not be fooled by the dissident group—they have no real plan for The
Pantry, and it appears that they are engaging in this proxy contest for
the self-serving goal of gaining publicity for themselves and their
newly formed hedge funds. Your Board and management team are making
important and significant progress on our strategic plan and have
positioned The Pantry well for sustained and profitable growth.
PROTECT THE VALUE OF YOUR INVESTMENT IN THE PANTRY:
VOTE THE WHITE PROXY CARD TODAY
We are confident that we have the right Board, the right management
team and the right strategy to continue to drive value for all
stockholders. We strongly urge you to protect the value of your
investment in The Pantry by voting “FOR” your Board’s experienced
and highly qualified director nominees on the WHITE proxy card
Your vote is extremely important, no matter how many or how few shares
you own. We urge you to vote today by telephone, online, or by signing
and dating the enclosed WHITE proxy card and returning it in the
postage-paid envelope provided. Please do not return or otherwise vote
any GOLD proxy card sent to you by the dissident group.
On behalf of your Board of Directors, we thank you for your continued
support of The Pantry.
Edwin J. Holman Dennis G. Hatchell
Chairman of the BoardPresident and Chief Executive Officer
Your Vote Is Important, No Matter How Many Or How Few Shares You Own.
If you have questions about how to vote your shares, or need additional
please contact the firm assisting us in the solicitation of proxies:
INNISFREE M&A INCORPORATED
Shareholders Call Toll-Free: (888) 750-5834
Banks and Brokers May Call Collect: (212) 750-5833
We urge you NOT to sign any Gold proxy card sent to you by JCP
Investment Management, LLC. If you have already done so, you have every
right to change your vote by signing, dating and returning the enclosed WHITE
proxy card TODAY in the postage-paid envelope provided. If you
hold your shares in Street-name, your custodian may also enable voting
by telephone or by Internet—please follow the simple instructions
provided on your WHITE proxy card.
Safe Harbor Statement
Statements made by the Company in this letter relating to future plans,
events, or financial condition or performance are “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements can generally be
identified by the use of words such as “expect,” “plan,” “anticipate,”
“intend,” “outlook,” “guidance,” “believes,” “should,” “target,” “goal,”
“forecast,” “will,” “may” or words of similar meaning. These
forward-looking statements are based on the Company’s current plans and
expectations and involve a number of risks and uncertainties that could
cause actual results and events to vary materially from the results and
events anticipated or implied by such forward-looking statements. Any
number of factors could affect actual results and events, including,
without limitation, the potential cost and management distraction
attendant to the dissident group’s nomination of director nominees at
the 2014 Annual Meeting of Stockholders, the ability of management to
increase profitability as a result of technology enhancements, cost
management efforts and store remodels, and new store openings and
acquisitions. These and other risk factors are discussed in the
Company’s most recent Annual Report on Form 10-K and in its other
filings with the U.S. Securities and Exchange Commission (the “SEC”),
and should be considered carefully. Readers are cautioned not to place
undue reliance on such forward looking statements. In addition, the
forward-looking statements included in this letter are based on the
Company’s estimates and plans as of February 20, 2014. While the Company
may elect to update these forward-looking statements at some point in
the future, it specifically disclaims any obligation to do so.
Important Additional Information
The Pantry, its directors and certain of its executive officers are
deemed to be participants in the solicitation of proxies from The
Pantry’s stockholders in connection with the matters to be considered at
The Pantry’s 2014 Annual Meeting of Stockholders. The Pantry has filed a
definitive proxy statement and form of white proxy card with the SEC in
connection with its 2014 Annual Meeting of Stockholders. THE PANTRY
STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ THE DEFINITIVE PROXY
STATEMENT AND ACCOMPANYING WHITE PROXY CARD, AND ANY OTHER DOCUMENTS
FILED WITH THE SEC WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN
IMPORTANT INFORMATION. Information regarding the identity of
participants, and their direct or indirect interests, by security
holdings or otherwise, is set forth in the definitive proxy statement
and other materials to be filed with the SEC in connection with The
Pantry’s 2014 Annual Meeting. Stockholders will be able to obtain any
proxy statement, any amendments or supplements to the proxy statement
and other documents filed by The Pantry with the SEC for no charge at
the SEC’s website at www.sec.gov.
Copies will also be available at no charge at The Pantry’s website at www.thepantry.com,
by writing to The Pantry at 305 Gregson Drive, Cary, North Carolina
27511, Attention: Secretary or by calling The Pantry’s proxy solicitor,
Innisfree M&A Incorporated, toll-free at (888) 750-5834.
The Pantry, Inc.
Andrew Hinton, 919-774-6700
Scott Winter / Jonathan Salzberger,
Joele Frank, Wilkinson Brimmer Katcher
Sherman / Andrew Siegel, 212-355-4449
Source: The Pantry