Steak n Shake shareholder ratchets up heat

October 2, 2007

Sardar Biglari, the San Antonio investor who has thrown his weight around at Applebee's and other restaurant chains he owned stock in, said yesterday that he and an associate have been nominated by a group he heads to fill board seats at Steak n Shake Co. Inc., the struggling Indianapolis hamburger chain.

The nominations are necessary because attempts to discuss directorships with the existing board have been fruitless, Biglari said in a letter to shareholders posted at www.enhancesteaknshake.com.

Biglari, of San Antonio, Texas, leads a group that includes Lion Fund LP and Western Sizzlin Corp., the Virginia steakhouse where he serves as chairman and CEO. The group has amassed 7 percent of Steak n Shake shares in recent months, making it the largest shareholder.

"We are disturbed by the present direction of The Steak n Shake Company as exemplified by its failed vision, failed strategy, failed execution, and failed board," the letter said. "The amalgam of poor corporate governance, lack of strategic direction, and deteriorating operating and financial performance has led to dismal shareholder returns.

The other representative of the group nominated for a board seat is Philip L. Cooley, a Lion Fund director and vice president of Western Sizzlin.

The Biglari group isn't the only one pushing Steak n Shake to take action. In June, two Dallas-based investment groups-HBK Investments and Lone Star Funds-disclosed that they had accumulated nearly 10 percent of the company and wanted to explore an acquisition or other "potential transactions to maximize shareholder value."

In August, Steak n Shake hired the Wall Street firm Merrill Lynch & Co. to help examine "potential opportunities" following the abrupt resignation of CEO Peter Dunn. Dunn's resignation came after the company announced its eighth consecutive quarter of losses.

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