sec document
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/_/ Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/_/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
LONE STAR STEAKHOUSE & SALOON, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/_/ Fee paid previously with preliminary materials:
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/_/ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid
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(2) Form, Schedule or Registration Statement No:
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(4) Date Filed:
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This filing consists of the following information mailed by Lone Star
Steakhouse & Saloon, Inc. (the "Company") to its stockholders on October 25,
2006 in connection with the special meeting of stockholders of the Company to be
held on November 30, 2006 (the "Special Meeting"):
LONE STAR STEAKHOUSE & SALOON, INC.
224 EAST DOUGLAS
SUITE 700
WICHITA, KANSAS 67202
October 25, 2006
Dear Fellow Stockholder:
LONE STAR STEAKHOUSE & SALOON, INC. WILL HOLD A SPECIAL MEETING OF STOCKHOLDERS
ON NOVEMBER 30, 2006 TO CONSIDER AND VOTE ON A PROPOSAL TO ADOPT A MERGER
AGREEMENT PURSUANT TO WHICH YOU WILL RECEIVE $27.10 PER SHARE IN CASH IN
EXCHANGE FOR YOUR SHARES. The transactions contemplated by the merger agreement,
which we refer to as the "transactions," will result in the sale of our entire
company to affiliates of Lone Star Funds, a Dallas-based private equity firm.
WHY YOU SHOULD VOTE FOR THE TRANSACTIONS
Your board of directors has unanimously determined that the transactions are
fair to, and in the best interest of, our stockholders and unanimously
recommends that you vote FOR the approval of the transactions. The board has
concluded, and continues to firmly believe, that the transactions are in your
best interest for a number of reasons, including:
o THE CONTINUED DETERIORATION OF THE COMPANY'S FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, INCLUDING:
o THE CONTINUED DECREASE IN OUR EBITDA, AS EVIDENCED BY THE
DECLINE IN EBITDA FROM $70,983,000 IN FISCAL 2004, TO
$57,530,000 IN FISCAL 2005 TO $45,366,000 FOR THE 12-MONTH
PERIOD ENDED SEPTEMBER 5, 2006; AND
o THE CONTINUED DETERIORATION OF THE LONE STAR STEAKHOUSE &
SALOON FLAGSHIP CONCEPT, WHICH REPRESENTED APPROXIMATELY 66%
OF OUR CONSOLIDATED REVENUES FOR THE 12-MONTH PERIOD ENDED
SEPTEMBER 5, 2006. THIS DETERIORATION WAS MOST RECENTLY
DEMONSTRATED BY A 9.4% DECREASE FOR THE 2006 THIRD QUARTER IN
COMPARABLE STORE SALES, A KEY INDICATOR OF PERFORMANCE IN THE
RESTAURANT INDUSTRY;
o THE UNFAVORABLE OUTLOOK FOR THE COMPANY'S BUSINESS FOR THE
FORESEEABLE FUTURE IN LIGHT OF THE DIFFICULT INDUSTRY CONDITIONS
AND OPERATIONAL CHALLENGES FACING THE COMPANY, INCLUDING THE
NEGATIVE OVERALL PERFORMANCE OF THE CASUAL DINING SECTOR, THE
OVER-SATURATION OF THE CASUAL DINING INDUSTRY AND THE EXPECTED
OVER-SATURATION OF THE UPSCALE STEAKHOUSE SEGMENT;
o The fact that the $27.10 per share transaction consideration
represents 12.3 times our EBITDA for the 12 months ended September
5, 2006, which is significantly higher than the average multiples
paid in similar restaurant company sales over the past several
years;
o The fact that, though the Company's financial advisor contacted a
number of highly qualified potential buyers prior to our entering
into the merger agreement, and the merger agreement allows the
Company to respond to unsolicited acquisition proposals made by any
third party, we have not received any other offer to buy the
Company;
o The fact that the board carefully considered, over a period of
several months and with the assistance of nationally recognized
investment banks, a wide variety of strategic alternatives to
increase stockholder value, and ultimately determined that the
transaction with Lone Star Funds will provide more value to our
stockholders in a shorter period of time than any of the other
strategic alternatives that the board considered;
o Payment of the full purchase price to our stockholders in cash with
no financing contingency;
o The limited conditions to the consummation of the transactions,
which increases the speed and likelihood of a successful closing;
and
o The opinions received by the board from two nationally recognized
investment banking firms that, as of August 18, 2006 and based upon
and subject to the considerations and assumptions set forth in
their respective opinions, the $27.10 per share transaction
consideration was fair to our stockholders from a financial point
of view.
The proxy statement that we have previously sent to you contains a more detailed
discussion of these factors, as well as other important information about the
transactions. We urge you to read it carefully.
LONE STAR FUNDS, DESPITE THE SIMILARITY IN NAME, IS NOT AN AFFILIATE OR
ASSOCIATE OF LONE STAR STEAKHOUSE & SALOON, INC., AND LONE STAR FUNDS DOES NOT
HAVE ANY RELATIONSHIP WITH LONE STAR STEAKHOUSE & SALOON, INC., EXCEPT WITH
RESPECT TO THE MERGER AGREEMENT. NO MEMBERS OF THE MANAGEMENT OR THE BOARD OF
DIRECTORS OF LONE STAR STEAKHOUSE & SALOON, INC. WILL BE PARTICIPATING WITH LONE
STAR FUNDS OR ITS AFFILIATES IN THE PURCHASE OF LONE STAR STEAKHOUSE & SALOON,
INC.
WE URGE YOU TO VOTE FOR THE TRANSACTIONS
YOUR VOTE IS EXTREMELY IMPORTANT. Approval of the transactions requires the
affirmative vote of the holders of a majority of the Company's outstanding
shares. NOT VOTING OR ABSTAINING FROM VOTING YOUR SHARES HAS THE SAME EFFECT AS
A VOTE AGAINST THE TRANSACTIONS. Accordingly, please sign, date and return the
enclosed proxy card in the envelope provided, or submit your vote by telephone
or over the Internet following the instructions on the proxy card, to vote FOR
the transactions TODAY! If you hold your shares through a broker, please follow
the procedures provided to you by your broker regarding how to instruct your
broker to vote your shares, otherwise your shares will not be voted.
If you have any questions or need assistance in voting your shares, please call
our proxy solicitor, Innisfree M&A Incorporated, toll-free at (877) 456-3488.
Thank you for your support.
On behalf of the Board of Directors,
/s/ Fred Chaney
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Fred Chaney
Chairman of the Board of Directors
CERTAIN INFORMATION CONCERNING PARTICIPANTS
THE COMPANY HAS MADE A DEFINITIVE FILING WITH THE SECURITIES AND EXCHANGE
COMMISSION OF A PROXY STATEMENT AND ACCOMPANYING PROXY CARD TO BE USED TO
SOLICIT VOTES IN FAVOR OF THE TRANSACTIONS AT THE SPECIAL MEETING.
THE COMPANY STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY
STATEMENT AND OTHER PROXY MATERIALS RELATING TO THE SPECIAL MEETING BECAUSE THEY
CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS ARE AVAILABLE AT NO CHARGE
ON THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT HTTP://WWW.SEC.GOV. IN
ADDITION, A STOCKHOLDER WHO WISHES TO RECEIVE A COPY OF THE DEFINITIVE PROXY
MATERIALS, WITHOUT CHARGE, SHOULD SUBMIT THIS REQUEST TO THE COMPANY'S PROXY
SOLICITOR, INNISFREE M&A INCORPORATED, AT 501 MADISON AVENUE, 20TH FLOOR, NEW
YORK, NEW YORK 10022 OR BY CALLING INNISFREE TOLL-FREE AT (877) 456-3488.
THE COMPANY AND ITS DIRECTORS, EXECUTIVE OFFICERS AND OTHER MEMBERS OF ITS
MANAGEMENT AND EMPLOYEES MAY BE DEEMED TO BE PARTICIPANTS IN THE SOLICITATION OF
PROXIES FROM ITS STOCKHOLDERS IN CONNECTION WITH THE TRANSACTIONS. INFORMATION
CONCERNING THE INTERESTS OF THE COMPANY AND THE OTHER PARTICIPANTS IN THE
SOLICITATION IS SET FORTH IN THE COMPANY'S DEFINITIVE PROXY STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE TRANSACTIONS AND
ANNUAL REPORTS ON FORM 10-K, PREVIOUSLY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.