The Restaurant Group has rejected hedge fund Oasis’s push to gain a board seat, setting the stage for a battle between the Wagamama-owner and the activist investor.
Oasis Management, which has built a 6.5 per cent stake in TRG, accused the board of mismanaging the company and presiding over “one of the worst performing share prices of any UK leisure company” which was “disproportionately worse than what the impact of the challenging sector backdrop would alone justify”.
The fund, which came to prominence in the UK after it led a rebellion against food manufacturer Premier Foods, said a “failure of oversight” from the TRG board had led to a “strategic stagnation” at the casual dining operator, contributing to a 65 per cent fall in its share price since its last equity raise in March 2021.
TRG, which owns 423 venues across the UK including the Chiquito and Frankie & Benny’s chains, said in an update to investors on Thursday that it had rejected Oasis’s request for a board seat and calls for a strategic review of the company led by an “independent bank”.
In a statement responding to Oasis’s letter, TRG, which has been run by former HBOS chief executive Andy Hornby since 2019, said its trading performance had been “strong” when compared to the wider UK sector, most of which is privately owned.
It added the board was “already” reviewing the group’s strategic options and suggested this would be “disrupted by Oasis’ suggestion of an additional process”.
It also hit back at the hedge fund’s commitment to the company by highlighting its relatively recent purchase of TRG stock, claiming it “contrasts with a number of our major shareholders, many of whom have been consistent long-term holders”.
Oasis first disclosed a holding of around 2 per cent of TRG stock in November 2020, before selling and subsequently reacquiring a shareholding. In November 2022 it increased its share of the company to 5 per cent, before again increasing it to 6.5 per cent, according to TRG.
The Wagamama-owner said it would therefore “not be in the interest of our other shareholders” to grant Oasis a board seat.
In an earlier statement, Oasis warned that failure to comply with its demands “will increase the risk of further deteriorating public market interest and leave shareholders with no recourse but to seek to hold its representatives to account”.
Oasis was founded in 2002 by Seth Fischer, a former portfolio manager in Asia for JPMorgan Chase’s Highbridge Capital. It makes the majority of its investments in Asia, but its rare clashes with UK-listed companies have often led to all-out conflicts with boards.
Representatives of Oasis did not immediately respond to requests for comment about TRG’s reply.
In 2017, the hedge fund joined the board of Premier Foods after buying up nearly 20 per cent of the stock. At its annual meeting with investors the following year, it called for the group’s chief executive Gavin Darby to be removed, accusing him of “persistent value destruction”. Darby narrowly survived a shareholder vote but stepped down in November 2018.