Starboard Value LP will make its chief executive officer the chairman of Papa John’s International Inc. (PZZA.O) via a US$200 million investment in the troubled pizza chain.

The activist fund’s CEO, Jeffrey Smith, will take over the board role after Papa John’s founder John Schnatter stepped down as chairman last year following reports that emerged that he used a racial slur. Shares of Papa John’s gained 11 per cent in premarket trading.

Papa John’s plans to use the proceeds to repay debt and invest in the business, it said in a statement. Starboard is making its investment through the purchase of new convertible preferred stock, and the deal includes the option of an additional US$50 million investment.

Starboard has previously mounted activist campaigns at Olive Garden owner Darden Restaurants Inc., Yahoo Inc., Symantec Corp. and other companies.