Bailing Out on Shareholders!
The Peanuts cartoons of the 60’s used to tickle me in thought
provoking ways when the football season came because I wondered why Charlie
Brown put up with all the indignities of having the ball pulled away
when he went to kick it and then always taking the brunt of Lucy’s
brutality. Why didn’t he just find a more compatible group of friends
or take his football and go home… I guess he did the latter eventually
Similarly, we have companies like the Outback Steakhouse
(OSI) who have conjured up another way of leaving
the shareholder interests in the distance and move the insider’s interests front and center.
It appears that they have taken a page from Charlie
Brown and want to take their ball and go home. They just announced this
week that there is a group of founders and insiders who want to take
the company private because they have exhausted all the ways they can
think of to enhance shareholder value.
This all started about a year ago when some of their
long time management personnel found it outrageous to have to comply
with Sarbanes Oxley and wanted to go in a different direction. Some
of those officers resigned and went to work for a private equity firm
that wanted to seek opportunities in that area of the marketplace.
This is rather an abomination to those of us who believe
in the integrity of the marketplace in that it is some
of the very same people who left the company who now are part of the
group trying to take the company private to accomplish the goals that
are seemingly impossible as a public company. If you mark your calendars
about three (3) years from now, you will likely see an initial public
offering (IPO) of many of the same assets that are currently known to
us as the Outback Steakhouse and its adjoining properties. That’s
assuming that the deal to take the company private
gets done without a shareholder rebellion.
Why should we care about this? It’s just another deal and if capitalists
can pull it off shouldn’t we be celebrating their efforts? The
answer to that question is that if this company is attractive enough
for insiders to do a leverage buyout to own it, it also could be operated
effectively on behalf the current shareholders.
This is all part of the
double dealing attitude that exists today in corporate
board rooms that is inherent in the way management represents management
first and the owners (shareholders) second. If you have not started to
think about the concept of “corporate governance” as it relates to Biblically
Responsible Investing, it is time to bring your Bible
to Wall Street.
Sent November 13,
Dwight Short if you would like to receive future
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