NEW YORK — The clock’s ticking down, but there’s little sign of the two sides backing down as Haggar Corp. continues to fight efforts by its largest shareholder, Kahn Brothers & Co., to secure at least one seat on the Dallas-based apparel firm’s board of directors.

With a proxy battle looming, Haggar is up against a deadline at the end of this month for the filing of its definitive proxy statement, which is required to be filed within 120 days of the end of the firm’s fiscal year on Sept. 30, 2002. Last year, that statement was filed on Jan. 7 and the annual meeting was held on Feb. 6.

The release of the proxy might be the next indication of whether Haggar’s management is ready to make some kind of an accommodation with Thomas Kahn, president of Kahn Brothers, who has asked that he and Dallas investor Mark Schwarz stand for election to Haggar’s six-member board, which is currently evenly divided between inside and outside directors. Kahn Brothers owns 13 percent of Haggar’s stock on behalf of its investor clients.

Best known for its men’s slacks, Haggar acquired women’s apparel maker Jerell in 1999. Last year, its sales grew 8.4 percent to $481.8 million as net income, excluding a $15.6 million accounting charge, came in at $8 million.

Haggar has so far resisted Kahn’s attempts to supplement the board with either himself or Schwarz or both. The firm initially declined to provide him with copies of its stock ledger and on Nov. 22 filed a declaratory action rebutting the request. Since then, certain materials have been provided, including Haggar’s stock ledger, but subsequent requests by Kahn have led Haggar to amend its declaratory filing.

Clearly, the parties aren’t getting along, and the likelihood that they will establish a rapprochement isn’t likely to grow, based on Kahn’s reaction to Haggar’s more recent actions.

"In a five-day period [last month], they gave us a lot of the material we asked for, as they’re required to, but it wasn’t without a lot of sturm und drang (storm and stress), as Dr. Freud might say," Kahn told WWD. "We asked them to drop the lawsuit and end the stalling techniques, which are nothing but legal maneuvering and a waste of corporate assets."We have enough material now to wage a very serious and effective proxy contest," he continued. "If they want to spend time and money, that’s up to them, but they will ultimately comply with the law and give us what we’re looking for."

And what, exactly, is that? "Substantial institutional investor representation not handpicked by management, which will lead to good shareholder value and stronger corporate governance," according to Kahn.

His resolve appeared to be strengthened by a Haggar press release issued last month, which characterized the firm as "gravely concerned" about a potential conflict of interest should Kahn be added to the board. Moreover, in a statement attributed to the generally affable Joe Haggar III, the firm’s ceo, Haggar claimed that Kahn "has failed to provide any significant ideas or vision. In short, over the last five years, Mr. Kahn has not demonstrated how his board membership would contribute to the success of the company."

Kahn said the statement was "very out of character for Mr. Haggar and the company." Contradicting its assertion, Kahn noted that among his suggestions over the years has been that Haggar hire an investor relations (IR) firm "to make sure they come up on people’s radar screens. I was pleased to learn that they’d done that, but I think they did it to line up votes with large institutional owners. Suddenly, when we try to place two directors, they’re hiring an IR firm and trotting all over courting investors."

Kahn acknowledged that he has done some hiring of his own, retaining McKenzie Partners to work on the solicitation of proxies.

Officials at Haggar have been mum about what they will do when the firm’s definitive proxy is issued. Current directors Rae Evans and Donald Godwin could stand for reelection; alternate directors could be proposed by the board, or Kahn, Schwarz or both could take spots on the ballot. A spokesman indicated that Haggar’s board also has the option of expanding the board through a vote of the current directors.

The spokesman commented: "We have always been open to constructive dialog with Mr. Kahn and other Haggar shareholders, and we will continue to take appropriate actions that we believe are in the interest of all of the company’s shareholders."Kahn appears ready to carry on his fight for board representation well beyond the company’s annual meeting, if unsuccessful this time around. He told WWD that, even if he doesn’t prevail in 2003, he will try again next year until his goal of placing independent directors on the board bears fruit. If he does manage to place at least one director on the board despite Haggar objections, he expects to propose a slate in 2004.

"The way to prevent this is to invite one of us on the board conditioned upon us signing a standstill agreement," Kahn told WWD. "In other words, ‘We put you on the board but you agree to no proxy fights while you’re on it.’"

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