Teen retailer Charlotte Russe Holding Corp. has recommended its shareholders reject KarpReilly Capital Partners LP’s slate of nominees to its board of directors, including KarpReilly’s Allan Karp.
This story first appeared in the March 10, 2009 issue of WWD. Subscribe Today.
The recommendation came after Karp sent a letter Friday indicating his intention to nominate himself for a seat on the retailer’s board as well as Hezy Shaked, chairman and chief executive officer of World of Jeans & Tops, and Gabriel Bitton, president of Buffalo David Bitton.
According to the letter, the nominees own about 1.9 million of Charlotte Russe’s common stock, or roughly 8.9 percent of the shares outstanding, with Karp holding the lion’s share.
Charlotte Russe since January has been evaluating strategic alternatives for its business, including the possible sale of the company. KarpReilly’s representation on the board, it asserted, could “delay and disrupt” this process, because the investment firm had previously expressed interest in acquiring the retailer. The women’s specialty retailer said a rejection of KarpReilly’s nomination would not prevent it from participating as a bidder in a sale process.
In November, KarpReilly and H.I.G. Capital Partners LLC offered to take over Russe, valuing it at between $9 and $9.50 a share, or $188 million to $199 million. This represented a 31 to 38 percent premium over the closing stock price the day before the offer.
The San Diego-based retailer rejected the bid, calling it an “opportunistic proposal,” as it came in the early stages of the company’s turnaround plan.
B. Riley & Co. and Plainview Capital LLC both criticized the company’s rejection of the bid, and Riley threatened a proxy fight if it wasn’t reconsidered.
On Monday, shares closed at $5.54, down 6 cents or 1.1 percent.
Calls to KarpReilly seeking comment weren’t returned on Monday.
Charlotte Russe’s second-quarter results are scheduled to be reported on April 21, and its annual meeting is scheduled to take place one week later.