Friendly Ice Cream offers investor a board seat

Friendly Ice Cream Corp. has offered a seat on its board to its biggest investor, saying it wanted to avoid a distracting and expensive proxy fight.

Sardar Biglari, a San Antonio investor who owns almost 15 percent of the company's stock, has asked shareholders to elect him and his associate, Philip Cooley, to the board of directors at next year's next annual shareholder meeting.

He recently launched a Web site and posted a letter to shareholders, blasting the company's "poor corporate governance, poor operational performance, poor stock performance, and its weak balance sheet."

The company said Wednesday it has agreed to add two seats to the board, but offered him only one of them. Deborah Burns, senior director of investor relations, said one seat on the seven-member board is proportional to Biglari's share in the company.

She said Biglari has a limited time, which she did not specify, to respond to Friendly's offer.

Biglari declined comment through a spokeswoman on Wednesday.

The board's chairman, Donald Smith, has drawn sharp criticism from the chain's co-founder, S. Prestley Blake, who sold the company in 1979 but is still a major shareholder. Blake filed a still-pending lawsuit accusing Smith of mismanaging the company and funneling Friendly money into another restaurant chain.

Biglari's critical letter alluded to the lawsuit, saying "the company's escalating legal costs directly result from poor judgment on corporate governance issues, which has led to extensive litigation."

Friendly's, a Wilbraham-based chain of company-owned and franchise restaurants, serves sandwiches, entrees and ice cream desserts and distributes ice cream through more than 4,500 supermarkets and other retail locations. (AP)