Starboard agreed to make the investment through the purchase of new convertiblepreferred stock, and the deal includes the option of an additional$50 millioninvestment throughMarch 29, 2019, according to a statement.
Smith, along with Anthony Sanfilippo, former CEO of Pinnacle Entertainment, have been appointed to be the two new independent directors of the pizza chain. Papa John's CEO Steve Ritchie is also joining the board, the statement said.
Around half of the proceeds from the deal will be used to repay debt, with the rest going towards investing in the business, Papa John's said.
Our agreement with Starboard concludes a comprehensive strategic review conducted over the past five months to better position Papa Johns for growth, improve the Companys financial performance and serve the best interests of our stakeholders," said Olivia Kirtley , a member of the Special Committee and most recently chairman of the Papa John's board.
"This transaction provides the Company with financial resources and strong and experienced directors on the Board in order to position the Company for success over the long term. We believe we have found terrific partners to advance Papa Johns strategy, especially given their record of reinvigorating and growing premier restaurant and consumer brand companies."
The pizza chain also announced preliminary financial results for the three months and full year ended December 30, 2018. Its system-wide North Americacomparable sales decreased 10.5% and its internationalcomparable sales were flat for the periodDecember 31, 2018,toJanuary 31, 2019.
Meanwhile, its 2018 adjusted diluted earnings per share are expected to be near the low-end of its previously provided range of $1.30 to $1.60, impacted by a $51 million special charge following its founder John Schnatter resigning as chairman in July after he used a racial slur on a media training conference call. Analysts were expecting $1.47 earnings per share.
Papa Johns was down 30% in the past 12 months.
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