Richtree suspends CEO, vice-president

"It has always been part of our primary business plan to gradually transition the company towards franchising. We're at that sort of crossroads where we need to begin to act on that plan," West said…Richtree's initial stock offering six years ago at $6.30 per share put the company's value at $65 million and enabled the purchase of Mövenpick licences in Canada and the United States. The stock closed in Toronto yesterday at 12 cents. Its market value has fallen to $2.8 million.

The Toronto Star
October 30, 2003

Richtree suspends CEO, vice-president
Reicherts submit offer to buy assets. Finance chief fired Tuesday is rehired.
Madhavi Acharya-Tom Yew

Troubled Richtree Inc., operator of the popular Mövenpick, Marche and Marchelino restaurants in Canada and the United States, is serving up a fresh helping of conflict in its executive boardroom.

The company's board of directors suspended with pay Jorg Reichert, its chief executive, and vice-president Marianne Reichert — the husband and wife team who are also the firm's controlling shareholders.

The board also reinstated the company's chief financial officer — who was fired by Jorg Reichert on Tuesday.

Colin West is now back as CFO and in charge as senior executive vice-president, while Matt Williams will serve as director of restaurant operations during the suspensions.

The Toronto-based restaurant company, still smarting from last summer's tourism drop, has seen its share price fall precipitously since going public in 1997. It has embarked on a plan to franchise its popular "free-flow" concept, where patrons order their food at European-style stations and see it cooked in front of them.

The Reicherts' suspension comes after the couple submitted offers to buy or license various company properties, West said in an interview yesterday.

"That's why there needs to be a separation of the bidder from the parties evaluating the bids," he said. "All I can say is the board of directors has acted in a way it believes to be appropriate."

Board chairman Robert Francis did not return calls seeking comment yesterday.

The Reicherts, along with West, remain as directors on Richtree's board.

The couple could not be reached for comment.

"Hopefully, we all at the end of the day have the best interests of the company at heart. This is a task that needs to be done by the board," West said.

The Reicherts' recent actions will be reviewed and a special committee of the board will deal with offers submitted by "Reichert interests" to buy or license various assets, the company said in a release yesterday. The committee will also review offers from other parties interested in buying assets.

"It has always been part of our primary business plan to gradually transition the company towards franchising. We're at that sort of crossroads where we need to begin to act on that plan," West said.

There is no disagreement among company executives about the need to franchise, he added. "I think the disagreement is more about process than the actual goal itself."

Asked why he was fired by Jorg Reichert earlier this week, West called the move a "unilateral" decision.

"I guess the differences in approach crystallized to the point that maybe he felt he and I no longer thought the same way and he did what he thought he should do," West said.

"The board has its own view of things and they have asked me to take on these responsibilities starting now and have expressed their confidence in me."

Richtree has an ongoing dispute with Mövenpick-Holding of Switzerland over franchising and licence rights. Richtree filed a $337 million lawsuit against the Swiss parent in April and Mövenpick filed a counter-claim for $100 million in May.

Jorg Reichert started as a manger of Toronto's York Street Mövenpick in 1981. Richtree now operates 14 Mövenpick, Marche, and Marchelino restaurants in Toronto, Ottawa, Montreal and Boston.

Richtree's initial stock offering six years ago at $6.30 per share put the company's value at $65 million and enabled the purchase of Mövenpick licences in Canada and the United States. The stock closed in Toronto yesterday at 12 cents. Its market value has fallen to $2.8 million.

with files from Canadian Press


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