Blum Growth Fund, LLC is leading an effort to improve company performance and increase shareholder value at Cosi, according to Brad Blum, founder and CEO for BLUM Growth Fund.
The former CEO of Burger King and Olive Garden is also calling for a new board of directors and has offered to run the company for a salary of $1. On Sept. 15 Blum, filed 13D with the Securities and Exchange Commission (SEC), indicating it has increased its ownership position in Cosi to nearly 7 percent
According to a press release, Blum maintains that shareholder concerns center around Cosi's poor performance under a long-tenured board that can claim few successes. In its 9-year history as a public company, Cosi has never turned a profit, and the company has endured a 95-percent reduction in stock price under four out of the five current board of directors. Shares were listed at $11.21 per share in March of 2006, and have been listed as low as $0.56 on Sept. 12 of this year.
These issues culminated in the recent notification from NASDAQ that the stock is in danger of being delisted. The Cosi board of directors also recently accepted the resignation of former CEO James Hyatt. The current chairman of the board, Mark Demilio, assumed the position as interim CEO. Demilio has no prior restaurant experience.
"Cosi is a publicly traded company. In the interest of protecting the investment of all involved, we must recommend a change in the board of directors, a change in philosophy and a new leadership focus," Blum said in the press release. "We call upon all shareholders to join us in our efforts to effect positive change at Cosi and participate in a non-legally binding expression of 'no confidence' for the current board. This is not a proxy fight or a hostile takeover, but an exercise in shareholder democracy."
Blum said his first order of business as the Cosi CEO would be to increase profitability by increasing guest satisfaction and sales.
"It will take innovation, operational excellence and strict cost controls to achieve superior financial results and increase shareholder value," he said.
Blum has requested interested Cosi shareholders to express their lack of confidence in the present Board of Directors and comment on its inability to successfully lead the company (or confidence in the Board, if comfortable with business as usual).
"We believe Cosi board members need to hear the honest views of company shareholders or in all likelihood the board and the company will continue on its current course," said Blum.
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