Benihana Inc. to Eliminate Dual-Class Common Stock Structure

The restaurant operator has registered $109.8 million of common shares on Form S-4 filed June 9 in connection with a special meeting proposal to holders of common, Class A common and Series B convertible preferred stock of the company.  Benihana proposes to amend and restate the company's certificate of incorporation by reclassifying one of the two existing classes of common stock into the other class, which would remain as the only class outstanding.  

In reaching its decision to recommend the reclassification proposal, the board of directors considered the following material factors:

• Improved liquidity and trading efficiencies (greater liquidity of the common stock following the reclassification may allow investors to buy and sell larger positions in that class with less impact on the stock price than would otherwise be the case).
• Alignment of voting rights with economic ownership (the reclassification would eliminate the disparity between voting interests and economic interests by establishing a simplified common stock capital structure whereby each share of common stock is entitled to one vote).
• Increased attractiveness to institutional investors (the company believes that simplifying our capital structure could address complexity and liquidity concerns that institutional investors typically express and will allow common shares to be held by certain institutional investors whose investment policies do not permit them to invest in companies that have disparate voting rights). 
• Elimination of investor confusion and improved transparency. (the company believes that some investors may not understand the differences between our two classes of common stock, including confusion as to the calculation of our total market capitalization, shares outstanding and earnings per share).
• Increased strategic flexibility (the company believes that the simplified common stock capital structure could provide increased flexibility to structure acquisitions and equity financings by using equity as acquisition currency and for possible future offerings of our capital stock to potential investors).
• Dilution to the common stock (the board recognized that, pursuant to the reclassification proposal, the reclassification will be dilutive to holders of common stock with respect to voting power).

Benihana will account for the reclassification by adjusting its capital stock account based on the aggregate par value of the shares outstanding immediately following the reclassification.  The change in capital stock will be offset by a decrease in paid-in capital.  The Company expects that all of the shares following the reclassification will be listed on The Nasdaq Global Select Market under the symbol “BNHN”.  The Benihana board has amended the company’s shareholder rights plan to expire automatically when and if the reclassification of the Class A common Stock becomes effective.