Ramius suggests CKE Restaurants consolidate, curb capital spending

By Lisa Kerner

Charlotte, N.C., June 17 - Ramius LLC said it is disappointed in the performance of CKE Restaurants, Inc. as well as in its ongoing commitment to an aggressive capital expenditure program.

"We are publicly recommending that the company aggressively evaluate its cost structure and capital spending plan because the company seems unwilling to take the necessary steps to improve its business and develop a more conservative stance on capital spending," Ramius partner Jeffrey C. Smith said in a Ramius news release.

In a June 17 letter to CKE president and chief executive officer Andrew Puzder, Ramius suggested the company consolidate two of its offices, located less than 100 miles apart, into a lower-cost facility.

Ramius, a 3.6% shareholder, said CKE's $145 million capital spending plan for fiscal year 2009 is "too aggressive and unwarranted," adding that it would yield a $40 million free cash flow deficit.

The investor said it also plans to vote against the re-election of Peter Churm, Janet E. Kerr, Daniel D. Lane and Puzdar at CKE's annual meeting.

In response, CKE said it was constrained in its comments because its shareholders meeting is scheduled for June 19, its quarterly earnings are due to be released on June 25 and its conference call is set for June 26.

After the company has made disclosures on this timetable, it would "welcome a more thorough dialogue," said Puzder in a letter to Ramius.

CKE is a Carpinteria, Calif., quick-service restaurant franchisor and operator.

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