SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20449
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported)
September 28, 2006
Ryan's Restaurant Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Commission File Number 0-10943
South Carolina 57-0657895
(State or Other Jurisdiction (IRS Employer Identification No.)
of Incorporation)
405 Lancaster Avenue (29650)
Post Office Box 100
Greer, SC 29652
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (including area code):
(864) 879-1000
Not Applicable
(Former Name or Former Address,
if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
( ] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[X] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
Item 8.01. Other Events
As Ryan's Restaurant Group, Inc. ("Ryan's") previously
disclosed, a putative shareholder class action, Marjorie Fretwell
v. Ryan's Restaurant Group, Inc. et al. (the "Shareholder
Action"), Case No. 06-CP-23-4828, was filed on July 28, 2006
against Ryan's and its directors in the Greenville County, South
Carolina Circuit Court. The Shareholder Action asserted various
allegations in connection with the proposed merger of Ryan's with
and into a subsidiary of Buffets, Inc. (the "Merger"). On August
28, 2006, Ryan's and its directors filed an answer denying the
substantive claims of the Shareholder Action, and also filed a
motion to dismiss the Shareholder Action. On September 14,
2006, the First Amended Class Action Complaint (the "Amended
Complaint") was filed in the Shareholder Action. Ryan's
considers the Shareholder Action to be without merit. It has,
however, concluded that settling the Shareholder Action is
advisable in order to avoid the expenses and distractions
associated with litigation. Accordingly, subject to Court
approval, Ryan's has reached an agreement in principle with
Plaintiff's counsel to resolve the litigation by responding to
certain allegations in the Amended Complaint with the information
set forth below in this Form 8-K. Although Plaintiff believes
the information is material, Ryan's does not consider any of such
information to be material to the Merger or otherwise, and is
including such information in this Form 8-K solely in connection
with the settlement of the Shareholder Action.
The special committee created by Ryan's board of directors
to evaluate potential transactions, such as the Merger, was
formed to avoid any conflict of interest that might arise with
respect to members of the board of directors who are also members
of Ryan's executive management team in connection with a possible
acquisition of Ryan's. The board of directors did not determine
and did not believe that there was any actual conflict of
interest at the time the special committee was formed.
The special committee selected Brookwood Associates, LLC to
be its financial advisor based on Brookwood's experience in
connection with transactions involving the restaurant industry,
the specific industry experience of the representatives of
Brookwood who would be performing services for the special
committee and the recommendation of the chairman of the special
committee based on discussions he had with representatives of
Brookwood. The special committee did not interview other
prospective financial advisors.
The process that the special committee agreed upon to
evaluate the offer made by the entity identified in Ryan's proxy
statement with respect to the Merger as "Company A" and upon
which to make a recommendation to the board of directors in
connection therewith was to (i) retain Brookwood as its financial
advisor, (ii) have Brookwood conduct due diligence and provide a
preliminary value analysis of Ryan's, (iii) negotiate with
Company A in an effort to obtain Company A's highest offer, and
(iv) have Brookwood contact on a confidential, "no names" basis
certain other parties to be identified by Brookwood that had
sufficient resources and relevant industry experience and that
Brookwood believed might have an interest in acquiring Ryan's.
Brookwood considered various potential financial and strategic
parties. At Brookwood's request, Ryan's management provided
Brookwood with the names of parties who had previously contacted
Ryan's but Ryan's did not participate in the decision as to
which, if any, of the parties to contact. Caxton-Iseman Capital,
Inc. (which organized an investment partnership that owns
Buffets, Inc.) and the party identified in Ryan's proxy statement
with respect to the Merger as "Company B" were both parties
contacted by Brookwood. Each of Company A and Company B was a
financial party. Caxton-Iseman Capital, Inc. (based on its
ownership of Buffets, Inc.) was a strategic party. We refer to
Caxton-Iseman Capital, Inc. and Buffets, Inc. collectively in
this Form 8-K as "Caxton-Iseman". Of the parties who executed
confidentiality agreements, two parties advised Brookwood that
they were not interested in receiving additional information or
in pursuing a potential transaction. One of these parties
indicated that it was not interested in the sector of the
restaurant industry in which Ryan's operates and the other party
indicated that it did not view Ryan's as a growth opportunity.
In response to Brookwood's request for each party's highest
and best offer, each of Company A, Company B and Caxton-Iseman
made offers of $15.25 per share. In considering these same price
offers, the special committee determined that Company A's offer
was the most favorable, because Company A had conducted the most
due diligence, had significant equity available to commit to the
transaction and offered the best equity incentive plan for the
Company's employees. The special committee believed that each of
these factors increased the likelihood that Ryan's and Company A
would be able to consummate a transaction. In addition, the
special committee believed that these factors reduced certain
risks to Ryan's that may occur if the proposed acquisition did
not close, including (but not limited to) the potential loss of
employees and the disruption of operations after announcement of
a transaction.
On June 2, 2006, Brookwood notified Caxton-Iseman and
Company B that the special committee had determined to enter into
exclusive discussions with another party. As previously
disclosed, on the evening of June 2, Caxton-Iseman contacted
Brookwood and increased its proposed purchase price from $15.25
to $16.75 per share. Company B did not ask for additional time
or revise its offer. Later that day a representative of
Company B called Brookwood. Based on that conversation in which
Company B indicated generally that they appreciated the
opportunity to participate in the process, were disappointed in
the outcome and would be interested in being considered by
Brookwood in the future with respect to other potential
opportunities involving other companies, Brookwood believed that
Company B did not intend to take any further action with respect
to Ryan's. On June 7, Company B e-mailed an unsigned letter to
Brookwood indicating that it might be able to increase its
purchase price range based on discussions it was having with a
competitor of Ryan's. Brookwood and the special committee did
not consider the June 7 letter to be an offer and considered the
letter too contingent and uncertain because it was predicated on
Company B's ability to negotiate a transaction both with Ryan's
and with a competitor. Brookwood did not request, and Company B
did not make, a revised offer that was more definite or less
contingent. Brookwood did not have any further discussions or
communications with Company B during the negotiations with Caxton-
Iseman.
Brookwood will receive a fee from Ryan's for its services
upon consummation of an acquisition of Ryan's (in addition to the
fee received for its fairness opinion). Approximately 90% of
Brookwood's fee for services in connection with the merger (other
than the fee for its fairness opinion) is contingent upon the
closing of such transaction.
As previously disclosed, certain of Ryan's executive
officers may become eligible for severance payments pursuant to
existing agreements with Ryan's in connection with certain
termination circumstances following the Merger. The table below
includes a calculation of the amounts of severance payments that
would be owing to Ryan's executive officers if these
circumstances were to occur.
One Time Two Times
Executive Officer Annual Compensation Annual Compensation
($) ($)
Charles D. Way* 571,453 1,142,906
G. Edwin McCranie* 386,483 772,966
Fred T. Grant, Jr. 298,456 596,912
Michael Rick Kirk 280,457 560,914
J. Randolph Hart 227,632 455,264
Ilene Turbow 168,213 336,426
Janet J. Gleitz 120,283 240,566
Richard Sieradzki 144,470 288,940
Edward Tallon 114,356 228,712
* Member of Ryan's board of directors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
RYAN'S RESTAURANT GROUP, INC.
Date: September 28, 2006 By: /s/Janet J. Gleitz
Name: Janet J. Gleitz
Title: Secretary