Biglari Holdings Inc. (NYSE: BH) Holdings Accused of Reorganizing at Shareholders’ Expense
According to the complaint, Sardar Biglari is the company’s Chief Executive Officer and Chairman who beneficially owns approximately 52.5% of Biglari’s outstanding stock and engages in myriad lucrative related-party transactions with himself and his immediate family. According to the complaint, Mr. Biglari has hatched a plan to reorganize the company’s corporate structure to ensure he remains permanently in control of the company. In November 2016, Mr. Biglari proposed to the Board that the company implement a dual-class capital structure, and the Board’s Governance, Compensation and Nominating Committee recommended the Board adopt and approve the proposal. A dual-class structure will allow the company to issue low-vote shares in future stock-for-stock acquisitions that would cause little to no dilution of Mr. Biglari’s equity stake. Mr. Biglari will secure indefinite control over the company as a result of the reorganization. Since Mr. Biglari is a majority shareholder, all other votes on the harmful transaction are rendered meaningless.
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