Monro Announces Agreement to Eliminate Class C Preferred Stock - Seite 2

“We welcome the perspectives of Monro shareholders and appreciate the active dialogue we have had with them regarding their desire for the Board to pursue options for a recapitalization,” said Robert E. Mellor, Chair of the Special Committee. “We believe this agreement will resolve the complexity presented by the Company’s legacy equity capital structure and is in the best interests of the unaffiliated Monro shareholders. We are confident this step will make Monro a more attractive investment opportunity, simplify the Company’s capital structure, and enhance our corporate governance by placing all shareholders on an equal footing.”

The agreement implements the automatic conversion by inclusion of a sunset period of approximately three years (the “sunset period”), after which the Company’s dual-class veto-vote share structure, which has been in place since 1984, will be eliminated, if the recapitalization is approved by shareholders and the Class C Holders have not previously converted their shares of Class C Preferred Stock. The sunset period will run until the earliest of the third anniversary of the date of the 2023 Annual Meeting, the first business day immediately prior to the record date established for the determination of the shareholders of the Company entitled to vote at Monro’s 2026 Annual Meeting of Shareholders and the date on which the Class C Holders, in the aggregate, cease to beneficially own at least 50% of all shares of the Class C Preferred Stock issued and outstanding as of the date of the agreement. At the end of the sunset period, all shares of Class C Preferred Stock that remain outstanding will be automatically converted into shares of Monro common stock at the adjusted conversion rate. Under the current structure, at least 60% of the shares of Class C Preferred Stock must vote as a separate class or unanimously consent to effect or validate any action taken by the common shareholders, meaning the Class C Holders could effectively veto any matter approved by Monro’s common shareholders. If the recapitalization is approved, the sunset period will start following approval by Monro’s shareholders at the Annual Meeting. During the sunset period, the Class C Holders will have the right to appoint one member of the Board. This designee will be Peter J. Solomon, a current director, so this right will not expand the size of the Board.