Papa Johns has recently completed a deal where it will get $200 million in funding. This $200 million will be provided for them as an investment from a finance entity known as Starboard Value LP. This investment adviser often invests funds into companies that are undervalued along with actively participating in its management. According to Papa Johns, Starboard Value has until the end of March to make an additional $50 million. With this investment, Papa Johns will have an opportunity to get much needed capital to bounce back from a difficult summer due to a recent scandal. This scandal involved the founder making controversial remarks which led to him being removed as Chairman by the senior executives. The current chief executive officer Steve Ritchie is looking to help improve the culture of the company as well as take advantage of this new financing investment.
As of today, Papa Johns will expand its board by appointing two new independent directors. The CEO of Starboard Value Jeffrey Smith and Anthony Sanfilippo of Pinnacle Entertainment will be the new board member. Steve Ritchie was also appointed to the board as well. All three of these individuals will look to help restore the image and culture of Papa Johns. They will also look to use the capital to help increase sales and get the company back into a favorable financial standing.
In order to get the funding, Papa Johns CEO Steve Ritchie formed a special committee. This committee was used to evaluate the strategic options for Papa Johns and work with top financial service firms such as Lazard and Bank of America Merrill Lynch. Once the deal is finalized, Papa Johns will look to repay its debt as well as look for ways to continue its growth. Steve Ritchie and Papa Johns will also look to adopt a new strategy that will help it restore its status as one of the top pizza restaurant chains in North America. The new strategy will include using a disciplined approach to capital allocation, improving technology and unit economics, creating more brand awareness and also helping employees and franchisees succeed.