Kona Grill (KONA) Responds to Mill Road Capital's Offer
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Kona Grill, Inc. (Nasdaq: KONA) announced today that it has responded to the expression-of-interest by Mill Road Capital, L.P. as of May 18, 2009 to acquire all of the Company's outstanding shares of common stock. The text of the response was as follows:
June 16, 2009
Mill Road Capital L.P.
Two Sound View Drive, Suite 300
Greenwich, Connecticut 06830
Attention: Mr. Thomas Lynch
Dear Mr. Lynch:
Thank you for your letter dated May 18, 2009, wherein you expressed, on behalf of Mill Road Capital, L.P. and one or more of its affiliates, an interest in acquiring all outstanding shares of Kona Grill, Inc.'s (the "Company") common stock in an implied $3.67 per share cash merger transaction.
Consistent with the Board of Director's (the "Board") and management's fiduciary duties, we carefully consider all bona fide offers for strategic and financial transactions submitted to our Board in good faith, which seek to enhance stockholder value and which otherwise are fair to and in the best interests of all of our stockholders.
With due respect for Mill Road Capital's capacity as the Company's second largest stockholder and its continued support as such in the Company's recently completed subscription rights offering, the Board has met with the Company's leg al and financial advisors to evaluate and consider your expression-of-interest. Based on such meetings and evaluation, the Board has concluded that the indicative price per share in your letter does not reflect, and materially underprices, the intrinsic value and prospects of the Company and its common stock in any potential sale of control transaction. Accordingly, we do not believe it would be prudent to engage in discussions regarding a potential transaction at this time.
We thank you again for your interest in and support of our Company.
Very truly yours,
Mark Zesbaugh
On Behalf of the Board of Directors
cc: Board of Directors of Kona Grill, Inc
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