OUTBACK STEAK HOUSE (AN UPDATE)

We last visited the folks at OSI as they were scrambling to get enough votes to take this company private because management was convinced they just could not put up with all the onerous requirements of Sarbanes Oxley and the oversight required to be a public company. This did take some convincing since many shareholders held out for a variety of reasons not the least of which was that the company was offering shareholders less than fair value while also structuring a buyout that was going to pay insiders hundreds of millions of dollars for helping the private equity firms pull the transaction off. After three votes two of which were delayed because they didn't have the votes, the deal finally went thru.

How are the boys doing at Outback now, you ask? Pretty well, they indicated this week that the restaurant business is fun again and it's amazing what you can do when you don't have to report to anyone about your accounting or your corporate activities like you do when your a public company. And the hundreds of millions that the insiders got, yea that makes the restaurant business fun too. Yea, the sales figures are down but we can talk about that at the country club instead of having to answer to shareholders, and of course the weak divisions need to be sold off and we might keep a piece of that says the founder.

But the topper of all toppers was the fact that the founder was quoted as saying that public ownership is not AAAALLLL Bad as that is how he reaped billions the first time around by selling an IPO of Outback Steakhouse in the go-go 90's. The real message there? In a few years we will be ready to do that again as we pay down debt and likely try to foist this stock back on the market and stash a few billion more away at that time.

In the mean time, if this isn't a lesson on why faith based investors in all walks of life need to get their act together to deal with the issues of CORPORATE GOVERNANCE, I can't find a better one. All of the corporate strategies that these companies employ could be done with public shareholders as they are under private equity ownership. The real difference is that under private ownership, the benefits to a few are quite out of proportion to the small shareholder. Just remember the words of Outback founder Chris Sullivan, "I'd never say I'd not go public again, but I do enjoy being private." (St. Pete Times, 11-29-07)

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