ANAHEIM — William P. Foley II, who led an investor group late last year that acquired a controlling interest in Carl Karcher Enterprises, has been elected chairman of the Carl's Jr. fast food chain, replacing interim chairman Elizabeth A. Sanders.
The fast food company also is seeking shareholder approval for a corporate restructuring that includes the creation of CKE Restaurants Inc., a new Delaware- based holding company that would oversee Karcher Enterprises' restaurant businesses.
Karcher Enterprises President Donald E. Doyle said the restructuring was driven by the company's recent expansion beyond the Carl's Jr. fast food chain and into the fast-growing rotisserie chicken restaurant business. Karcher Enterprises in January became the exclusive franchisee for Boston Chicken restaurants in Southern California and Sacramento.
In a related announcement, Karcher Enterprises said it is seeking federal Securities and Exchange Commission approval to sell up to $75 million in securities, largely to help fund construction of Boston Chicken restaurants.
The emergence of Foley, 48, as chairman apparently signals the end of a bitter struggle in which the company's founder, Carl N. Karcher, was forced out of the chairman's office during a highly publicized feud over the company's strategic direction.
"It's been alluded to in the past that (Sanders) was an interim chairman, and that the role would pass to someone else," said Laurie Lively Smith, a Los Angeles-based analyst with Seidler Amdec Securities Inc. "And it seemed to be a given that if (Foley) wanted it, the chairman's role was his."
Foley, chairman and chief executive of Irvine-based Fidelity National Financial Inc., in December led a group that took control of 22% of Karcher Enterprises stock in return for helping Carl N. Karcher restructure nearly $30 million in personal debt.
Foley earlier said he was a "logical" candidate for the chairman's role and that he wanted the company's founder back as chairman emeritus. Sanders, who was selected to succeed Karcher in October, will remain on Karcher Enterprises' board.
Foley said Monday that Karcher Enterprises is "taking the first steps now in what is going to be a good, long program of development. . . . We're going to have the roll-out of the new (Carl's Jr.) value menu, we've got Boston Chicken going, and hopefully, earnings and revenue will develop."
In a related development, Karcher Enterprises and the company's 76-year-old company founder have hammered out an employment agreement that board members are expected to approve during a Wednesday meeting. "It's my belief that everything will be finalized Wednesday," said Andrew Puzder, Karcher's attorney.
Karcher, who founded the Carl's Jr. chain in 1941, will return to a company that has changed considerably since he was forced out in late 1993.
In January, Karcher Enterprises acquired the right to open as many as 300 Boston Chicken restaurants in Southern California. The holding company and the name change "reflect the fact that we're more than Carl's Jr. restaurants," Doyle said. "We've now got two businesses going."
The proposed restructuring also is likely to change the makeup of Karcher Enterprises' board of directors, though Foley would be chairman of the board for the holding company.
The company on Monday said it wants shareholders to approve a retirement policy that would force board members to retire at age 70. The age restriction won't apply to Karcher, 76, whose family still holds 18% of Karcher Enterprises' outstanding shares.
But the age policy would force longtime board member Kenneth Olson, 74, to retire. Olson, a retired president of the Vons Companies Inc. grocery store chain, has been on Karcher Enterprises' board since 1980.
Shareholders are scheduled to vote on the restructuring during an annual meeting in June.
Analysts said the restructuring evidently marks the end of a lengthy and highly public boardroom tiff that resulted in Karcher's dismissal and Foley's December election to the board.
"I can't say that I was surprised by any of it," Smith said. "They have ambitious plans to roll out the Boston Chicken stores, and they needed outside capital at some point to do that.
"As for the corporate name change, I honestly don't think it was meant to slight Carl Karcher, the person," Smith said. "It's simply a change that reflects the true business of the company. Boston Chicken is going to be a bigger and bigger part of Karcher Enterprises."
Foley on Monday reiterated his support for a planned value menu that is designed to reverse a revenue slide that is hurting profitability. Doyle's team is developing a menu that's supposed to make the 350-unit chain more competitive with large national chains that correctly identified public demand for better food values.
Doyle said it is imperative that the company be better able to compete with other chains that earlier introduced value menus.