Activist investor Galloway urges Noodles & Company to sell most of its restaurants

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Galloway Capital Partners and affiliated companies, which person acquired 6.01% of Noodles & Company’s outstanding shares implicit the past year, suggested connected Tuesday that the institution merchantability astir 200 of its company-owned restaurants.

The fast-casual noodle concatenation had 349 company-owned restaurants arsenic of Sept. 30 and had 86 franchised restaurants. 

“After conducting extended analysis, we judge the company’s shares are materially undervalued and that absorption of the committee indispensable instrumentality decisive enactment to heighten shareholder value,” Galloway main and main concern serviceman Bruce Galloway said successful a missive to Noodles & Company main enforcement serviceman Joe Christina. The missive was portion of a Schedule 13D filing by Galloway with the Securities & Exchange Commission.

Noodles & Company’s shares closed astatine 72 cents connected Monday, good beneath the $1 minimum threshold required by the Nasdaq banal exchange. It has been retired of compliance for astir of the year.

Galloway said it estimated that the recommended merchantability would make astir $60 cardinal and would let Noodles to wage disconnected “a important information of its high-cost debt, which presently carries involvement rates successful the 9-10% range.”

That would successful crook fortify currency travel and “eliminate perceived bankruptcy risk.”

It would besides trim involvement expenses and amended net per share, Galloway said.

“We spot Noodles astatine a decisive turning point. Management has been proactive and transparent successful reviewing each options, and the fiscal logic down a balance-sheet reset and targeted store income is clear. Our

focus is connected partnering to unlock meaningful shareholder value,” helium said.

In September, Noodles hired fiscal services steadfast Piper Sandler arsenic an advisor to research options for maximizing shareholder value, including a merchantability of the company.

Galloway said the attack helium suggested worked for quality salon concatenation Regis Corporation, successful which the hedge money had antecedently invested and “where the equity worth improved dramatically aft executing a akin deleveraging strategy attributed to our activistic involvement. With the close steps, Noodles tin region bankruptcy risk, cleanable up its superior structure, and let the equity to determination importantly higher, arsenic we person seen successful akin situations.”

Also successful the filing, Galloway said it “intends to prosecute the committee and management” regarding stock performance, operations, management, governance — including imaginable changes to the committee of directors — conflicted enactment transactions, superior allocation policies, and strategy.