Soliman Asks New Vote After Restaurant Acquisition Bid Rejected

Newport Beach restaurateur Anwar Soliman accused the directors of Restaurant Associates Industries on Thursday of protecting management at the expense of shareholders by narrowly rejecting his $110-million acquisition bid for the company.

In a prepared statement, Soliman said he had been told by a Restaurant Associates director that his takeover proposal was rejected, 6 to 5, in a board vote late Tuesday.

Soliman asked the board to reconvene and to determine that his proposal had actually been approved on the ground that three of the six votes cast against him should be disqualified.

He said the three questionable votes were cast by members of a management group that had made a competing, $88-million offer to buy the New York-based restaurant and newsstand company, whose holdings include the 42-unit Acapulco Mexican Restaurants chain in California.

Martin Brody, Restaurant Associates chairman and chief executive officer, declined to comment Thursday, saying the company had not yet seen Soliman’s statement.

According to Soliman, chairman of American Restaurant Group, the 11-member board voted to protect the interests of management--and not of shareholders--by turning down his offer to acquire the company for $19 per share.

Soliman said the board should reconsider the vote and omit those votes cast by members of the management team that proposed the leveraged buyout.

“If there’s a conflict of interest on any board, you abstain from voting,” Soliman said. “You not only don’t vote, but you get the hell out of the room so that you don’t embarrass anybody.”

After the management group--led by Brody and Max Pine, president and chief operating officer--first proposed a leveraged buyout three weeks ago, Restaurant Associates formed a special committee of three non-management directors to consider that bid. The committee was later asked to consider Soliman’s higher offer.

Soliman said he was told by one of the committee members that the committee had unanimously recommended his offer to the full board of directors. But when the full board considered the proposal, three of the six opposing votes were cast by Brody, Pine and company attorney Sidney Lester Klepper, who was also a member of the management buyout group.

The other three directors who voted against Soliman’s offer, he said, were Allan A. Goldring, president of Goldring International Group of Woodbury, N.Y.; Darwin C. Dornbush, an attorney for the management group; and Renee Levow, Brody’s daughter and an independent financial consultant.

The control of Restaurant Associates is complicated because its managers and directors own about 37% of the company’s Class B shares, which have 10 times the voting power of the company’s Class A stock, of which 13.5% is owned by insiders. Altogether, management controls more than a third of the company’s total voting power.

Even so, Soliman said, “Outside shareholders own 70% of the value. . . . The management team owns 30% of the value of this company. Management basically is holding the shareholders hostage.”

Soliman declined to say whether he would consider increasing his $19-per-share offer: “We’re looking at alternatives and hope they’ll reconvene.”

Soliman has also declined to discuss the possibility of making a tender offer directly to shareholders over the objections of management.

Restaurant Associates’ Class B stock closed Thursday on the American Stock Exchange at $15.375 per share, up 25 cents, while the Class A shares closed at $15.125, up 37.5 cents.