Oasis, the second largest shareholder in The Restaurant Group (“TRG” or the “Company”), notes the response of the Board of Directors (“Board”) to our initial press release (both dated 16^th February 2023).

Oasis makes the following key points of clarification:

1. TRG’s Communication with the Market:

The Board states that “the operational performance of TRG since COVID has also been strong” across its business. This confirmation is welcomed by Oasis as – most significantly for shareholders –

• TRG had not disclosed any trading information on its performance since the publication of its interim results on 8^th September 2022.
• In TRG’s interim results, the Board highlighted considerable risk associated with the cost-of-living crisis impacting customer spend. However, unlike other major listed companies in the UK hospitality sector, the Board decided not to issue a trading update in January 2022, missing a clear opportunity to inform stakeholders on the impact of those concerns.
• Further to this, the statutory accounts provide no segmental information on the operating performance of its four business areas (other than on sales), making it impossible for shareholders and the market to assess how any or all of its segments are performing, and thus, unsurprisingly, TRG is assigned a low valuation rating.
• The Board also points to its two-year debt extension as “hugely important”, even though no details were provided on announcement of the new lending terms and the associated costs of the refinancing. One negative outcome is that TRG’s cash headroom has fallen from £227m in June 2021 to £184m in June 2022 and to £140m in December 2022.

Again, Oasis reiterates the need for increased transparency with the market, especially on financially material developments.

2. TRG’s Strategic Review:

Oasis welcomes the limited public disclosure that the Board is reviewing the Group’s strategic options as no announcement had been made on such a review prior to the Board’s response.

Despite this, the Board has refrained from communicating detail on the scope and the process which this review is following. It is important that a process like this is supported and aligned to the expectations of shareholders in order to optimize the outcome, therefore, engagement of shareholders in the process from the start should have been considered necessary.

• The Board’s response is the first public announcement of any strategic review conducted by TRG.
• The Board has made no prior attempt to publicly communicate any details of the scope or process of this review to shareholders – let alone engage with them on it.

The Board’s decision to exclude shareholders from the ongoing strategic review process necessitates heightened scrutiny on the announced outcome and expectations will be equally high on the retrospective disclosure.

Given this lack of timely and transparent communication, Oasis reminds the Board that it is not a shareholder’s responsibility to come up with the strategy for the Board to consider. However, shareholders are well within their rights to request an independent review following a considerable period of share price underperformance, where no strategic review has been communicated publicly and there is considerable doubt as to the Board’s alignment with the shareholder experience.

3. Oasis’s Shareholding:

Oasis confirms that it has continuously maintained a shareholding in TRG since August 2020 and made the necessary regulatory disclosures when required.

The Board’s attempt to denigrate Oasis’s engagement by their statement that “our Chairman met Oasis face-face for the first time in December 2022” omits to mention that Oasis: (1) has been communicating since well before the incumbent Chair’s tenure; and (2) first requested a meeting with the new Chairman following a meeting with TRG’s CEO in June 2022; the earliest date offered to Oasis was a September phone conversation, nearly three months after our initial request.

4. Engagement with Shareholders:

The Board’s response to our press release also completely avoids any mention of TRG’s three equity capital raises in the past 5 years (two of which were under the current management team) at prices substantially in excess of the current share price.

Shareholders unfortunate enough to participate in those equity raises in the past 5 years (two of which were under the current management team) – have seen the value of their investment collapse by c.70% since 2018.

• Longer-term shareholders have suffered even worse, losing a staggering c.93% since the 2015 peak, whilst currently receiving no dividends, buybacks or capital appreciation.

Rather than acknowledge the existence of any longer-term underperformance, the Board’s sole response is to refer to the intervening impact of the pandemic. Without such recognition, shareholders can have no confidence in the Board’s ability to remedy the situation and drive shareholder value growth, which serves only to demonstrate the need for increased Board accountability.

As noted in Oasis’ initial press release, TRG losses are “materially worse than its closest peers, and disproportionately worse than what the impact of the challenging sector backdrop would alone justify” and illustrate a decline “which began before the pandemic”. The Board’s refusal to acknowledge this objective reality serves only to widen the gap between the shareholder experience and the need for accountability at Board level.

Oasis reiterates its desire to co-operate constructively with the Board. However, more of the same ruinous and devastating share price performance is not an option – failure by the Board to recognise and work with stakeholders who are committed to TRG’s future will leave shareholders with no recourse but to seek to hold TRG’s representatives to account.

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Oasis is publishing this release solely for informational purposes in its capacity as manager of and/or investment advisor to private funds managed and/or advised by it. The release and the information, statements, opinions, interpretations and beliefs contained in it are exclusively those of Oasis and are provided in good faith, but no representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the contents of the release, and no person shall be entitled to place any reliance on the release or its contents. This release is not intended to be, nor should it be construed as, investment, financial, tax or legal advice, or a recommendation to buy, sell or hold any security or other investment or pursue any investment strategy. Neither the release nor any of its contents constitutes an inducement or offer to purchase or sell or a solicitation of an offer to purchase or sell any securities or other investments in The Restaurant Group PLC or any other person.

About Oasis

Oasis Management Company Ltd. manages private investment funds focused on opportunities in a wide array of asset classes across countries and sectors. Oasis was founded in 2002 by Seth H. Fischer, who leads the firm as its Chief Investment Officer. More information about Oasis is available at https://oasiscm.com.

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