Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 10, 1995 TAG: 9503100054
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: SHANNON D. HARRINGTON STAFF WRITER
DATELINE: LENGTH: Medium
Meanwhile, disputes continue within the company. David Wachtel, the ousted chief executive Foti replaced last week, said he intends to file a lawsuit charging breach of his employment contract and abandonment of a company growth plan.
Foti, formerly chief financial officer for Nashville, Tenn.-based Western Sizzlin, said in a statement that he will take a much more conservative approach to company growth than Wachtel proposed.
Plans for the privately held company include continual growth of the franchise system with "a possible goal of going public in the future," Foti said. But, he did not want to risk leading the company back into debt, a problem which plagues its history.
"The board intends to follow a conservative approach to expand within its own resources rather than borrowing and possibly leveraging the future of the company," Foti said.
But that won't work, according to Wachtel.
"You have to lead by example," he said in a telephone interview. "The company failed before because it never had company operations."
The Western Sizzlin Corp. owns only one steakhouse; 278 others in the chain are franchised operations.
Western Sizzlin, formerly owned by a group in Dallas, Texas, was purchased in 1993 by a group of franchisees, including Foti and Wachtel. The Dallas group had filed for bankruptcy protection because of an accumulated $23.5 million debt. The company was purchased in 1993 for $12 million.
In 1994, the first year after the company emerged from bankruptcy, Western Sizzlin reported $1.1 million pretax profit on revenues of $9.1 million. Foti made those figures public Thursday.
Wachtel said that when he and 20 other investors, including Foti, assumed control of the company, they presented shareholders with a plan for company growth.
He said the company's directors abandoned that plan and he offered to buy out the remaining stock from other shareholders. Wachtel tried to acquire at least 60 percent of the company's shares for a tender offer of $13 million. He holds 13 percent of the shares, making him the largest single shareholder.
Wachtel said the board fired him after he made his offer. But he said he wasn't as upset about the termination of his employment contract, which had four years remaining, as he was about the abandoned plan.
"The big issue is not the contract. The biggest part is that we violated the plan that we presented to our shareholders," he said.
Wachtel, former president and chief executive officer of the Shoney's Inc. restaurant chain, said he will file a breach of contract suit against Western Sizzlin. But his Nashville lawyer, Aubrey Harwell, said there is nothing definite yet about a lawsuit.
"This is something that needs to be resolved in businesslike fashion. It would be better resolved short of litigation," Harwell said.
by CNB