Chair of Wagamama owner to step down as activist pressure continues

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The chair of Wagamama owner The Restaurant Group has said he will step down for personal reasons following a growing chorus of calls from activist investors for him to go.

TRG, which also owns Italian-American chain Frankie & Benny’s and the Brunning & Price pub chain, said on Friday that Ken Hanna, its chair since January last year, would not seek re-election at the group’s annual general meeting next year and the group would initiate a search for his successor.

Hanna’s decision to leave was “due to personal reasons”, according to TRG. But his exit will be interpreted as a major concession to activist investors that have called for his removal as part of a campaign for a shake-up and partial sale of the casual dining operator.

The announcement comes after Columbia Threadneedle, which had been TRG’s biggest shareholder and had backed the management in the face of a revolt at a recent annual general meeting, on Thursday cut its shareholding by 6.5 percentage points to around 10 per cent.

Hong Kong-based activist fund Oasis Management, which led opposition at the AGM to Hanna’s re-election galvanising 23 per cent of voting shareholders to vote against it, is now the biggest shareholder, with around 18 per cent of the stock.

Following TRG’s half-year results earlier this week, New York-based activist fund Irenic Capital, which owns 4 per cent of the stock, also renewed calls for Hanna to step down because of corporate governance failures after he refused to consider appointing independent directors to the board, according to correspondence seen by the Financial Times.

Andy Hornby, TRG’s chief executive who faced a revolt over executive pay at the AGM, said Hanna had been an “exceptional” chair. Hornby said in a statement on Friday that Hanna had served “during a critically important period for TRG as we have successfully recovered from the Covid pandemic and made good progress with our strategy”.

Hanna said he was “leaving the company in great shape with the business trading really strongly, outperforming the market and making good progress on its strategic options”.

At its half-year results earlier this week, TRG raised its full-year profit expectations after adjusted earnings before interest, taxes, depreciation and amortisation jumped 15 per cent year on year to £36.3mn in the six months to July 2. Half-year revenues were up 10 per cent to £467.4mn.

Despite the rare bright spot of its half-year results, TRG, as the only listed UK casual dining operator, has become a symbol of the difficulties faced by mid-market restaurant chains during the pandemic and the cost of living crisis. High inflation has meant its customers have been hit with a crunch in their disposable income at a time when input costs have soared.

TRG’s share price is down about 65 per cent since its last equity raise in March 2021. Shares in the London-listed group were up by 5 per cent to 46.50p by lunchtime on Friday.

Activist investors own at least 20 per cent of TRG’s stock between them. Alongside Oasis and Irenic, New York-based Coltrane Asset Management is also a top-20 shareholder, and London-based Berry Street Capital owns nearly 2 per cent of the stock.

Irenic wants TRG to be broken up and privatised, likely through a sale to private equity, according to people close to the fund, while Oasis previously called for TRG to offload its Brunning & Price pub chain, which it believes could fetch about £160mn for the freeholds and £250mn for the whole business.

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