UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Main Street Restaurant Group, Inc.
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(Name of Issuer)
Common Stock, $.001 par value per share
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(Title of Class of Securities)
560345308
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(CUSIP Number)
Ephraim Fields, Managing Member
Clarus Capital Management, LLC
237 Park Ave., Suite 900
New York, NY 10017
(212)-808-7330
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(Name, address and Telephone Number of Person Authorized to Receive Notices
and Communications)
March 6, 2006
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
*The remainder of this cover page shall be filled out for
a reporting person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remained of this cover page shall not be
deemed to be "filed"
for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the Act but shall be
subject to all other provisions of the Act (however, see the Notes).
SCHEDULE 13D
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CUSIP NO. 560345308 Page 2 of 7 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
CLARUS CAPITAL MANAGEMENT, LLC
20-1190380
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
873,369
NUMBER OF
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8 SHARED VOTING POWER
SHARES 0
BENEFICIALLY
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9 SOLE DISPOSITIVE POWER
OWNED BY 873,369
EACH
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10 SHARED DISPOSITIVE POWER
REPORTING 0
PERSON WITH
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
873,369
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.1%
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14 TYPE OF REPORTING PERSON
OO
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SCHEDULE 13D
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CUSIP NO. 560345308 Page 3 of 8 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
EPHRAIM FIELDS
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
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7 SOLE VOTING POWER
873,369 (1)
NUMBER OF
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8 SHARED VOTING POWER
SHARES 0
BENEFICIALLY
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9 SOLE DISPOSITIVE POWER
OWNED BY 873,369 (1)
EACH
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10 SHARED DISPOSITIVE POWER
REPORTING 0
PERSON WITH
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
873,369 (1)
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.1%
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14 TYPE OF REPORTING PERSON
IN
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(1) Because Mr. Fields, in his role as sole managing member and 100% owner
of Clarus Capital Management, LLC controls its voting and investment
decisions, Mr. Fields may be deemed to have beneficial ownership of the
873,369 shares of Common Stock held by clients of Clarus Capital
Management, LLC.
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D ("Statement") relates to the common stock,
par value $0.001 per share ("Common Stock"), of Main Street Restaurant Group,
Inc., a Delaware corporation (the "Issuer"). The principal executive offices of
the Issuer are located at 5050 N. 40th Street, Suite 200, Phoenix, AZ 85018.
ITEM 2. IDENTITY AND BACKGROUND
(a) - (c) AND (f). This Statement is filed by Clarus Capital Management,
LLC , a Delaware limited liability company ("Clarus") and Ephraim Fields
(together, the "Reporting Persons").
Clarus is a private investment management firm which invests in publicly
traded U.S. equity securities. Ephraim Fields is the sole managing member and
100% owner of Clarus. Mr. Fields is engaged principally in the business of
serving as the sole managing member of Clarus and an affiliate, Clarus Capital
Advisors, LLC. Mr. Fields is a citizen of the United States of America.
The principal business address of each of the Reporting Persons is 237 Park
Ave., Suite 900, New York, NY 10017.
(d) - (e). None of the Reporting Persons during the last five years has
been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or was party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which any such
person was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The aggregate purchase price of the 873,369 shares of Common Stock owned by
the Reporting Persons is approximately $3,095,871, including brokerage
commissions. The shares of Common Stock owned by the Reporting Persons were
acquired with the working capital of Clarus.
ITEM 4. PURPOSE OF TRANSACTION
The Reporting Persons purchased the shares of Common Stock based on the
Reporting Persons' belief that the shares of Common Stock are undervalued and
represented an attractive investment opportunity. Clarus reserves the right,
consistent with applicable law, to acquire or dispose of additional securities
of the Issuer (whether through open market purchases, block trades, private
acquisitions, tender or exchange offers or otherwise). Clarus intends to review
its investment in the Issuer on a continuing basis and may engage in discussions
with management or the Board of Directors of the Issuer concerning the business,
operations and future plans of the Issuer. Depending on various factors,
including, without Limitation, the Issuer's financial position and investment
strategy, the price levels of the Common Stock, conditions in the securities
markets and general economic and industry conditions, Clarus may in the future
take such actions with respect to its investment in the Issuer as it deems
appropriate including, without limitation, seeking Board representation, making
proposals to the Issuer concerning the capitalization and operations of the
Issuer, engaging in short selling of or any hedging or similar transaction with
respect to the Common Stock, or changing its intention partially or entirely
with respect to any and all matters referred to in Item 4.
On January 11, 2006, and March 15, 2006, Clarus sent letters to the Board
of Directors of the Issuer which set forth Clarus' belief that the Issuer's
Common Stock is undervalued and requested that the Board of Directors
immediately begin exploring strategic alternatives designed to enhance
shareholder value (The "Board Letters"). The Reporting Persons hope that the
Board Letters will start an ongoing dialogue with the Issuer. Depending on the
outcome of these discussions, the Reporting Persons may modify their intent. The
summary set forth herein of the Board Letters do not purport to be a complete
description thereof and is qualified in its entirety by reference to the full
documents as filed as Exhibits to this Statement.
Although the foregoing represents the range of activities presently
contemplated by the Reporting Persons with respect to the Issuer, it should be
noted that the possible activities of the Reporting Persons are subject to
change at any time. Except as set forth above, none of the Reporting Persons has
any present plans or proposals which relate to or would result in any of the
actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The percentages set forth in this Item 5 are based on the Form 10-Q filed
by the Issuer on November 8, 2005, which stated that as of Novemeber 7, 2005,
there were 17,085,260 shares of Common Stock outstanding.
(a) As of the close of business on March 14, 2006, the Reporting Persons
directly own 873,369 shares of Common Stock representing approximately 5.1% of
the outstanding Common Stock. As of March 6, 2006, the date requiring the filing
of this Schedule 13D, the Reporting Persons directly owned 863,269 shares of
Common Stock representing approximately 5.1% of the outstanding Common Stock.
(b) The Reporting Persons have the sole power to vote and dispose of
873,369 shares of Common Stock. Mr. Fields is the sole managing member and 100%
owner of Clarus.
(c) See Appendix A for a list of transactions occurring in the last sixty
days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Other than as described in Item 4 herein, there are no contracts,
arrangements, understandings or relationships among the Reporting Persons, or
between the Reporting Persons and any other person, with respect to the
securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A: Letter to the Issuer, dated as of January 11, 2006
Exhibit B: Letter to the Issuer, dated as of March 15, 2006
SIGNATURES
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After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 15, 2006
CLARUS CAPITAL MANAGEMENT, LLC.
By: /s/ Ephraim Fields
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Name: Ephraim Fields
Title: Managing Member
EPHRAIM FIELDS
By: /s/ Ephraim Fields
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APPENDIX A
Transaction Date Number of Shares Average Price Paid
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1/5/2006 4300 4.2025
1/17/2006 9003 3.9787
1/19/2006 5500 4.25
1/20/2006 20400 4.3118
1/23/2006 22000 4.481
1/24/2006 3600 4.6336
1/25/2006 8200 4.65
3/3/2006 9500 4.9392
3/6/2006 24521 4.883
3/7/2006 10800 4.8349
3/8/2006 -50000 4.68
3/8/2006 17600 4.6838
3/9/2006 15800 4.9945
3/10/2006 5900 4.9994
3/13/2006 2900 5.0317
3/14/2006 7100 4.9280
EXHIBIT A
January 11, 2006
To: John Antioco
Kenda Gonzales
Michael Rawlings
Bill Shrader
Wanda Williams
Sergio Zyman
Clarus Capital Management beneficially owns over 4% of the outstanding common
stock of Main Street Restaurant Group, Inc. ("Main"). We commend Bill Shrader,
Mike Garnreiter and the rest of the company's management team for the dramatic
turnaround in the company's operations.
Despite its improved financial results, we believe the company's stock remains
significantly undervalued. Specifically, we feel Main's stock price does not
reflect:
1) the increasing cash flows that will result from the company's
expansion/remodeling plans and the closure of unprofitable Bamboo
Clubs;
2) the company's ability to minimize its cash taxes as a result of
its net operating loss; and
3) Main's relatively unlevered balance sheet which can easily
support the company's expansion and remodeling plans.
We believe Main's stock remains undervalued largely because of the company's
small market capitalization. Main has no analyst coverage, the stock is not
actively traded, and like many companies of its size, Main will soon begin to
incur relatively high, additional expenses simply to remain public. Main is
currently one of the smallest publicly traded restaurant companies. As you are
probably aware, several restaurant companies with small market capitalizations
have recently elected to go private, in part because of the difficulties they
faced in achieving an appropriate valuation in today's public market.
Main's stock price is currently 25% lower than the $5.75 per share takeover
offer the company rejected in October 2005 and we are concerned that Main's
small market capitalization will prevent it from ever achieving an appropriate
valuation in the public markets. As a result, we hereby ask the company's Board
of Directors (the "Board") to immediately and actively begin exploring
alternatives for enhancing shareholder value. We have analyzed several such
alternatives and believe Main's shareholders would be best served if the Board
retained an investment bank to pursue a sale of the company. We believe such a
transaction would provide the greatest returns for the company's shareholders
without in any way jeopardizing the company's long-term prospects. We also
believe there are both strategic and financial investors who would be interested
in acquiring Main at a significant premium to its current stock price.
We have been very disappointed by several of the Board's recent actions,
including its decision to sell stock to CIC (apparently without contacting many
other potential investors) as well as the Board's decision to implement a
"poison pill." Furthermore, we have become increasingly concerned that the Board
may not be focused enough on acting in the best interests of shareholders. Our
concern is based, in part, on:
1) Mr. Antioco's well publicized involvement with Blockbuster;
2) Mr. Zyman's decision to sell a significant amount of his Main stock;
and
3) Ms. Gonzales' and Ms. Williams' minimal ownership of Main stock.
We hope we are wrong and that you are indeed actively considering how
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Main's shareholders would best be served. We have done extensive analysis on
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Main as well as the overall restaurant industry, and as one of the company's
largest shareholders, would welcome the opportunity to speak with you so we can
better understand each other's perspective.
At this point we have elected to not publicly disclose this letter since it is
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our desire to work with you in a private and constructive manner. We hope you
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will respond to us in an expeditious manner so that we will not have to consider
our other options, some of which may bring some unflattering publicity to the
Board. We look forward to hearing from you and can be reached at (212) 808-7330.
Sincerely,
/s/ Ephraim Fields
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Ephraim Fields
Managing Member
EXHIBIT B
March 15, 2006
To: John Antioco
Kenda Gonzales
Michael Rawlings
Bill Shrader
Wanda Williams
Sergio Zyman
As owners of 5% of the outstanding common stock of Main Street Restaurant Group,
Inc. ("Main"), we were disappointed that the company's Board of Directors (the
"Board") chose not to respond to our letter dated January 11, 2006. For your
convenience, we have attached another copy of that letter.
We continue to believe that Main's stock remains significantly undervalued. Main
has a strong management team, a healthy balance sheet, attractive growth
prospects and a sizeable net operating loss carryforward. Yet, Main continues to
trade at one of the lowest multiples in the restaurant industry. We believe
Main's stock remains undervalued in large part because of its small market
capitalization. Main has no analyst coverage, the stock is not actively traded,
and the company will soon begin incurring relatively high, additional expenses
simply to remain public.
Several restaurant companies with small market capitalizations have recently
decided to go private, in part because of the difficulties they faced in
achieving an appropriate valuation in today's public market. Main currently is
one of the smallest publicly traded restaurant companies and we believe this
will make it extremely difficult for the company to ever achieve an appropriate
valuation in the public market. As a result, we again ask the Board to
immediately begin exploring alternatives for enhancing shareholder value. We
have analyzed several such alternatives and believe Main's shareholders would be
best served if the company were sold. Such a transaction would provide the
greatest returns for the company's shareholders without jeopardizing the
company's long-term prospects. We believe there are both strategic and financial
investors who would be interested in acquiring Main at a significant premium to
its current stock price. As a reminder, Main's current stock price is still
below the $5.75 per share takeover offer you rejected in October 2005.
In our original letter, we expressed our concern that the Board might not be
focused enough on acting in the best interests of the company's shareholders. We
noted that Main's chairman is also actively involved as the chairman and CEO of
Blockbuster Inc., a company which is experiencing well publicized difficulties.
Secondly, we noted that certain other Main board members either own very little
stock or have sold large portions of their stock. Finally, we expressed our
disappointment and surprise that the Board decided to sell stock to CIC
(apparently without contacting many other potential investors) and that the
Board decided to implement a "poison pill." We believe these two decisions were
not in the best interests of Main's shareholders. We had hoped you would respond
to our original letter in an effort to alleviate our concerns; however, your
decision to not respond to us only heightens the concerns that we (and many of
Main's other shareholders) have about the future of our company.
We have a sizeable position in Main and hope that this illustrates how strongly
we believe in the company and its management team. For reasons explained above,
we believe Main's shareholders would be best served if the company were sold. We
are eager to hear your thoughts on the matter and hope we will not have to take
additional steps (some of which are mentioned in our recently filed 13D) to
ensure that you are acting in the best interest of the company's shareholders.
Sincerely,
/s/ Ephraim Fields
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Ephraim Fields
Managing Member