The proposal was sent on Tuesday to the company Feldenkreis founded. The buyout terms include a non-binding offer of $27.50 a share, with a proposed transaction value of $430 million. As first reported by WWD, Feldenkreis is partnering with Fortress Investment Group.
Perry Ellis said Wednesday that its non-executive chairman intends to recommend that the board form a special committee of its non-executive, independent directors. The committee’s roles would be to “evaluate the proposal and determine the course of action that it believes is in the best interest of the company’s shareholders.”
Feldenkreis’ letter to the Perry Ellis board, which said he remains the largest shareholder with an ownership stake of 11.3 percent, expresses deep concerns over the direction of the company. The letter was disclosed in a regulatory filing, a Form 13D, with the Securities and Exchange Commission on Wednesday.
“I care deeply about the long-term health and growth of the company,” the former chairman wrote. He said he has been reviewing the company’s strategy and financial position to keep tabs on the value of his ‘significant investment” in the company over the long term.
“I am not comfortable with the motivations, strategy and oversight of the existing board and believe shareholder value will suffer under this board’s stewardship. As the largest single shareholder of [Perry Ellis], I am not prepared to stand by and see my economic interest mismanaged,” he wrote.
Feldenkreis said his proposal includes an equity roll-over contribution of his stake, plus capital commitment from Fortress affiliate, Fortress Credit Advisors, in the form of debt and equity, “to help fund future acquisitions, new licenses and an aggressive organic growth strategy.”
The former chairman noted the “unprecedented disruption and competition” in the branded apparel and retail space, which requires “conviction in strategy and long-term orientation toward investment in our brands, capabilities and people. Under the current public company paradigm, [Perry Ellis] is constrained by short-term objectives and a risk averse board unprepared to underwrite the business initiatives and opportunities that will drive shareholder value.”
In addition to having the cash to fully fund the transaction, Feldenkreis said he would speak to his son Oscar, who is chief executive officer, to see if he also would contribute his existing 7.9 percent stake in the company.
Feldenkreis also confirmed a WWD report that his financial adviser is SCOPE Capital Group affiliate SCOPE Advisors.
The proposal is not a binding offer, and is subject to the usual due diligence requirements, as well as execution of an agreement with management.
Feldenkreis was executive chairman of the company he founded until September, when he was ousted by the board. His 50-plus year history with the company goes back to the days when he founded apparel firm Supreme International in 1967 and became its chairman. Supreme became a public company in 1993, and changed its name to Perry Ellis International Inc. in 2000 upon completion of its acquisition of the Perry Ellis brand.