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Thu 16th Feb 2023 - The Restaurant Group responds to shareholder Oasis questioning a number of points it raised
The Restaurant Group responds to shareholder Oasis questioning a number of points it raised: The Restaurant Group (TRG) has responded to shareholder Oasis Management’s call for the Wagamama owner to “re-align its priorities” and take immediate steps to restore market confidence, in which it questions a number of points raised by the Asia-based hedge fund. Earlier today (Thursday, 16 February), the hedge fund, which manages private funds that own 6.5% of the company, said it wanted the Andy Hornby-led TRG to engage with its shareholders to explore all options for a management change in the near term. In response TRG said its board “welcomes constructive input from all shareholders that is supportive of the creation and delivery of long-term sustainable shareholder value”, and was issuing a response to “give context to the matters raised by Oasis in the letter”. It said: “The board of TRG notes Oasis's request for a review of ‘all options for meaningful governance change’. Whilst Oasis states ‘it has been engaging with TRG for several years’, our chairman (Ken Hanna) met Oasis face-to-face for the first time in December 2022. At this meeting, Oasis requested a seat on the TRG board and a strategic review to be conducted by an ‘independent bank’. This request was made without Oasis giving indication of strategic ideas that should be examined by the board. The board was already, and continues to, review the group’s strategic options. The board concluded this review should not be disrupted by Oasis' suggestion of an additional process. The board therefore decided it would not be in the interest of our other shareholders to grant Oasis a board seat.” TRG’s response also set out the hedge fund’s shareholding history. TRG stated: “Oasis has used various financial instruments to hold exposure to TRG stock, which makes it difficult to establish full disclosure of its holding history. Based on statements from Oasis and regular share register analysis, it appears that: Oasis disclosed a holding of circa 2% of TRG stock in November 2020, Oasis then exited its holding, Oasis re-entered at some point in the first half of 2022 with a holding of circa 2%, Oasis notified TRG of an increase to circa 5% in November 2022, Oasis's letter published today states it now owns circa 6.5%. Its trading history contrasts with a number of our major shareholders, many of whom have been consistent long-term holders.” TRG also stated its operating performance has been “resilient”. It said: “The operational performance of TRG since covid has also been strong when compared with the wider UK casual dining sector (the majority of which is privately owned). Wagamama has continued to trade extremely well over the past three years as indicated by its consistent market outperformance on sales and leading customer ratings; our pubs business (Brunning & Price) has delivered exceptional market outperformance on sales and consistently strong customer ratings; our leisure business has been carefully restructured to maximise cash flow; and our concessions business has been successfully re-sized and is well placed to benefit from strong earnings growth as air travel continues to recover in 2023 and 2024. In addition to this resilient operating performance, TRG announced in December 2022 a long-term debt refinancing for the next four years with flexible covenant arrangements and the ability to make further repayments as appropriate. This is hugely important in a casual dining sector where debt financing has proved difficult to achieve since covid.” The TRG board said it “always welcomes constructive dialogue with our shareholders” and will continue to engage with Oasis along with its entire shareholder base with the common goal of delivering shareholder value. It said: “The board continues to examine options to ensure that the strength of the group's operating performance generates shareholder value. TRG looks forward to announcing our full-year results on 8 March 2023. This will provide an opportunity to update shareholders on 2022 results, current trading and our medium-term strategy. TRG's management team will be meeting with our major shareholders following the results in March and our chairman will be offering major shareholders the usual opportunity to meet prior to our annual general meeting in May.” Earlier today, Oasis said it firmly believes in the underlying value potential of TRG's core brands and “emphasises its long-term commitment to the company”. It called on TRG to communicate to the market the strategic direction of the company and means of value creation. Further to this, it said the business should engage with shareholders on all options for “meaningful governance change in the near-term to promote this value creation and alignment with shareholders”.

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