The Copulos Group is Australia's second-largest KFC franchise, and operates 50 restaurants. Photo: Wayne Taylor
It's getting hot in the kitchen at Australia's largest fried chicken chain, Collins Foods.
One week after lifting his stake in Collins Foods to more than 17 per cent, property developer and fellow KFC franchisee Stephen Copulos is threatening to vote against the adoption of the remuneration report and the re-election of chairman Russell Tate at the annual meeting on September 3.
Mr Copulos, who owns Copulos Group, Australia's second-largest KFC franchise, has outlayed $2.9 million this month and $10 million in the past 18 months buying shares in his major competitor at prices not seen since its August 2011 float.
The Copulos Group is now Collins Foods' second-largest shareholder after Allan Gray, with 17.11 per cent
Initially, the share buying looked friendly enough. "Collins Foods is a business we understand," Mr Copulos said last week.
"We've been through the highs and lows and we're very comfortable with our position," he said.
However, it now appears the Collins Foods board is deeply divided.
At the centre of the dispute is Collins Foods' Sizzler restaurants in Australia and Asia. It is understood Mr Copulos wants Collins to exit Sizzler and slash hefty head-office costs.
"He thinks the company can be run a lot leaner," a source said.
However, the rest of the board believes the Sizzler brand still has legs and is reluctant to sell until it has turned the business around.
Outgoing chief executive Kevin Perkins is the chairman and major shareholder in Sizzler USA Acquisition, which operates and franchises Sizzler restaurants in the US.
Mr Copulos, who joined the board last year, told the company earlier this week he planned to withdraw his support for two resolutions at the annual meeting and would vote against the remuneration report and the re-election of Mr Tate.
Collins Foods held a special board meeting on Thursday to discuss the issue but says Mr Copulos has yet to formally explain why he plans to vote against the resolutions.
The remaining directors – Mr Perkins, Bronwyn Morris and Newman Manion – are still recommending that shareholders vote in favour of the re-election of Mr Tate.
They and Mr Tate also continue to recommend that shareholders vote in favour of the remuneration report.
Shepparton-based Mr Copulos, who has interests in food retailing, mining and property development, was not available for comment.
Collins Foods operates about 170 KFC and 85 Sizzler restaurants across Australia and Asia; the Copulos Group operates 50 KFC restaurants.
Collins Foods' largest shareholder, Allan Gray, said the developments had taken the company by surprise.
"We are working with both parties and the chairman to come up with an agreeable outcome," Allan Gray fund manager Simon Mawhinney said.
"The best way forward to address the impasse is to put a fresh set of eyes on the board to help other shareholders assess the options available."