An activist investor is nominating six people to the board of Luby’s Inc. as the struggling company reveals the full scope of its dismal performance in fiscal 2018.
New York City-based investment firm Bandera Partners LLC, led by Jefferson Gramm, has purchased more than 2 million shares of Luby’s stock, some 7% of the total company, according to a form filed late last week with the Securities and Exchange Commission.
Last week, Bandera Partners submitted a nomination letter to Luby’s nominating Gramm and five others for election to the board at the 2019 annual stockholders meeting.
Bandera nominated the slate “based on their belief that changes are needed to the board in order to maximize stockholder value,” the SEC filing stated. The firm declined to comment on the filing.
Luby’s, the operator of Luby’s, Fuddruckers Restaurants and one Cheeseburger in Paradise unit, has shuttered 21 locations this year and laid off some of its corporate staff as it struggles to pay its outstanding debt. It reported a loss of $33.6 million in fiscal 2018.
The company, which missed the deadline to file its end-of-year financial report by a couple of days,is at risk of defaulting on multiple lines of credit.
“The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and its ability to obtain alternative financing to refund and repay the current debt owed under its credit agreement,” according to its end-of-year SEC filing. “The above conditions raise substantial doubt about the company’s ability to continue as a going concern.”
Luby’s fiscal 2018 sales decreased $10.8 million, or 2.9%, over the previous year. The company’s culinary contract services division was the sole bright spot, with a $7.8 million sales increase.
Luby's currently operates 84 Luby's Cafeterias, 60 Fuddrucker's restaurants and one Cheeseburger in Paradise unit.
Its stock price has decreased dramatically in the last year, falling from a high of just over $3 per share in January to $1.22 per share Monday.