Rusty Pelican Will Resist if Takeover Is Attempted

The top operating officer of Rusty Pelican Restaurants Inc. said Thursday that the Irvine-based dinner-house chain will resist any takeover attempt by Rhode Island restaurateur Edward Grace III.

Company President Randolph Howatt was responding to this week’s announcement by Grace, president of Phelps-Grace Co. Inc. of East Providence, R.I., that he has acquired 6.9%, or 195,000 shares of Rusty Pelican’s outstanding common stock, and is contemplating a takeover bid.

Grace now is the third-largest individual shareholder, after Howatt and Chairman Louis Siracusa, who together own 38% of the restaurant company’s common shares.

Grace--who said he specializes in “taking over bankrupt companies”--on Wednesday denounced Rusty Pelican management as “unproductive and sloppy.” Grace said Thursday that he may try to win control of the company through a tender offer or by filing a shareholders’ derivative suit against the board of directors.

Howatt refused to speculate on Grace’s motives but said the company invited Grace last month to meet with management.

Commenting on Grace’s criticism of Rusty Pelican management, Howatt said that “of course, we’ve made some errors”--notably in selecting some restaurant sites that proved to be poor locations. But he added that the entire restaurant industry has been in a slump. He said that Rusty Pelican last summer laid off three executives and trimmed its expansion plans in an effort to correct its mistakes and improve its financial position.