Papa John’s ex-CEO Schnatter asks board to amend poison pill plan

Papa John’s founder John Schnatter asked the board of directors to remove a provision adopted to thwart takeover attempts in which he says prevents him by working with some other investors who may be interested inside company.

The so-called wolf-pack provision can be tucked inside a “poison pill” the board adopted in July to restrict Schnatter, who already owns almost 31 percent of the company, by acquiring more equity. The poison pill can be intended to defend the company against a hostile takeover if anyone amasses a stake of more than 15 percent without board approval.

Schnatter said several potential outside investors have expressed an interest in speaking to him about the company, however the provision “precludes me by discussing the company, my investment inside company or the activities or plans of potential investors or shareholders with them or anyone else with an interest inside company,” according to a letter dated Thursday as well as sent to the board as well as filed with the Securities as well as Exchange Commission on Monday.

A “wolf pack” can be a group of activist investors working together to gain control of a corporate board, according to the Yale Law Journal. The provision can be intended to prevent a dominant investor like Schnatter by teaming up with some other investors to regain control of the company. The former CEO as well as chairman was ousted by the company as well as barred by its corporate offices in July after a racially charged slur Schnatter made on a conference call came to light in which month.

“As detailed when in which was adopted, the rights plan does not prevent the board by considering any offer in which in which considers to be inside best interest of Papa John’s stockholders,” company spokeswoman Madeline Chadwick said in an email. “The plan also reduces the likelihood in which any person or group gains control of Papa John’s without paying an appropriate control premium to all of the company’s stockholders.”

The company’s shares have tumbled by more than 24 percent over the last 12 months, doing in which an attractive target to outside bidders.

The poison pill adopted by the board doubles the share cost for anyone who attempts to amass more than 15 percent of the company’s shares without board approval. Since Schnatter already owned about 30 percent when the shareholder plan was adopted, the provision kicks in for him above 31 percent. He currently owns 30.9 percent of the company, according to an SEC filing on Thursday.

Schnatter has repeatedly said he has no confidence inside company’s current management as well as has filed two lawsuits against the board, one seeking books as well as records related to his ouster as well as the some other accusing the board of breaching its duties to serve shareholders.

Schnatter said the wolf-pack provision unreasonably curtails his rights as a shareholder as well as may violate Delaware law.

“in which precludes shareholders by holding any substantive discussions about the company because of the threat of crippling dilution of their ownership interest inside company,” he said.

Terry Fahn, a spokesman for Schnatter, declined to comment.

The company’s shares were up less than 1 percent in trading Monday.

—CNBC’s
Lauren Hirsch
as well as
Sarah Whitten
contributed to in which article.

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