Restaurant Settlement Is Hard to Swallow
LOS ANGELES (AP) _ Some former Denny’s Inc. shareholders, who found it hard to swallow the price paid for their stock when the restaurant chain was taken private, now are having difficulty stomaching a lawsuit settlement.
Under the settlement, approved Thursday by Superior Court Judge Norman Dowds, 4,000 disgruntled stockholders will get not a dime more than they already had been paid.
Instead, they’ll be issued 20 cents per share in scrip that can be spent at the nation’s 1,000 Denny’s restaurants over three years.
The settlement ″appears to be more punishment than award to a presumptively injured party,″ the court was told by an administrator of a pension fund that held shares for its members.
A couple who held 8,500 shares ″literally must gorge themselves of $3,400 worth of Denny’s food over the next three years″ to ″reap the benefits″ of the settlement, the administrator wrote in objecting to the proposed settlement before the judge’s ruling.
The class-action suit contended that the $43 per share paid to buy out public stockholders when the company was taken private last year was inadequate.
But Jack Corinblit and Marc M. Seltzer, the Los Angeles attorneys who came up with the idea of the scrip, said that after initiating the case they examined thousands of documents and concluded that $43 a share was probably a fair price for the stock and that an even lower price could be justified.
″The risk of loss of the case was so overwhelming,″ Corinblit said. ″We could get nothing for the stockholders, or try to get an in-kind settlement.″