Luby’s Inc. (NYSE:LUB) board of directors may be in trouble after a proxy advisor recommended that shareholders vote for three board candidates backed by the company’s largest independent shareholder. Ramius Capital, which owns around 9.6% of the company’s shares, nominated four directors in its quest to unlock shareholder value but the proxy group noted that three should be sufficient to influence the board to consider the issues.

Ramius Capital, an activist hedge fund, suggested that the company consider strategic alternatives, including selling real estate and leasing back the sites for its restaurants. The move could provide the restaurant chain with a massive cash influx that could be used to enhance shareholder value through buybacks or dividends. The move could help boost shares substantially after they have been hit by poor performance during recent months.

Proxy Governance, a proxy advisory firm, said, “We believe that, even in the event that they brought no new operational ideas or business strategies to the table, the dissident’s nominees would still offer a significant opportunity to shareholders in their willingness to consider governance changes at the company, something the current board has been reluctant to allow.”

Meanwhile, the Luby’s board urged shareholders to reject the offer, arguing that Ramius is attempting to masquerade as a corporate governance and restaurant industry expert while really focusing on short-term strategies designed to rob the company of operating cash flows and kill future growth prospects. This thinking likely stemmed from the fact that the hedge fund initially requested that the company put itself up for sale; however, the hedge fund insists that it would not use its director control to influence the company. Regardless, this is definitely a stock worth watching!

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Nautilus, Inc. (NYSE:NLS) shares spiked today after an activist hedge fund won control over the Washington-based company’s board in a proxy contest. New York-based Sherborne Investors announced that it won four seats on the company’s seven-member board, which gives them the majority control that they need to enforce change.

“We appreciate the support of our fellow shareholders and look forward to working with the new board and management to implement an effective strategy at Nautilus to return it to profitability and establish a platform for future growth,” said Bramson in a statement.

The new board will include Sherborne managing partner Edward Bramson as Chairman as well as Gerard Eastman, Michael Stein and Richard Horn. These directors will join incumbent directors Robert Falcone, Ronald Badie and Marvin Siegert.

“I look forward to working with our newly reconstituted Board of Directors,” said Bob Falcone. “I believe very strongly in the future of this Company and am committed to implementing the necessary actions to restore it to sustainable growth.”

Nautilus also announced that it signed a commitment letter with the Bank of America to replace its current debt facility with an underwriten 5-year, $100 million asset-backed loan with an accordion feature to increase to $125 million. The loan, expected to close January 14th, will provide the company with the working capital that they need to undergo the changes sought by the activist hedge fund.

In the end, this is all great news for shareholders as change is finally being enforced. Clearly, the new hedge fund board members will be focused on delivering value for shareholders while the existing board will continue to provide valuable advice for the general business. Combined, these factors make NLS a stock worth watching!

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Centro Properties Group (ASX:CNP) shares spiked today when the company announced that it would consider putting itself up for sale after it was approached by several parties interested in its business. The Australian shopping mall owner invited potential suitors to make pitches as its board evaluates all options, including a sale of the company. Shareholders are hoping that the company will take action to unlock value and jump the stock’s share price, which had declined 89 percent in 2007.

Centro owns about 810 properties in Australia, New Zealand, and the U.S. and had planned to pay off its short-term loans by selling long-term debt on the commercial mortgage-backed securities market through attractive terms. However, the recent crisis has caused borrowing costs to rise and asset-backed securities to fall forcing the company to get a two-month extension from its creditors. This led to a substantial drop in the company’s share price as many investors question its integrity going forward.

Then, Centro shares dropped 76 percent on December 17th after the company cut its earnings forecast by 14 percent, suspended its first-half dividend and said it may have to sell properties as part of a restructuring to pay back debt. Given the recent popularity of mall properties around the world, this move prompted many interested parties to contact the company seeking more information on these asset sales.

“In recent days, we have received a significant number of unsolicited expressions of interest from a large range of strategic and financial investors in potential investments in the group and certain of our assets,” said Brian Healey, Chairman of Centro. “Therefore, as part of the strategic review process, Centro is now seeking expressions of interest for key alternatives available to it.

Centro is now requesting expressions of interest for two different scenarios. The first is a review of the company as a whole, including a recapitalization, equity issuance or acquisition. The second is interest in its Australian and U.S. wholesale funds, which reportedly account for a substantial portion of the interest they received. This announcement sent shares dramatically higher today, but many are quick to point out that the parties are mostly interested in purchasing the company’s assets not equity. So, it’s difficult to say how much the stock is worth. Regardless, this is definitely a stock worth watching!

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