The Special Committee of Perry Ellis International Inc. once again reiterated its commitment to George Feldenkreis’ bid to take the company private and recommended all shareholders vote for the transaction.
The statement Wednesday morning was in response to Randa Accessories’ letter that it sent to the committee on Monday reiterating its intention to continue to pursue an acquisition of Perry Ellis.
As reported, Randa has offered $28 a share, slightly higher than the accepted $27.50 a share from Feldenkreis.
On June 16, Perry Ellis’ board of directors, acting on the unanimous recommendation of the Special Committee of independent directors, approved the $437 million transaction to become a private company through an acquisition led by Feldenkreis.
In a continued public tit-for-tat battle between the Special Committee and Randa, the committee once again called Randa’s proposal “highly conditional, non-binding and insufficient,” a charge with which the Randa team adamantly disagrees.
It also says Randa has a “lack of evidence of sufficient cash equity on hand,” which is the same issue it claims the company had when it sought to acquire the company before the Feldenkreis bid was accepted. “Randa has failed to include any financing commitments for approximately $32 million of newly proposed mortgage debt indicated as a source of funds and made the entire financing contingent on its level of cash, accounts receivable and inventory, assets upon which the Special Committee has conducted no diligence and into which the Special Committee has no visibility since Randa is a privately held company. Additionally, Randa has failed to provide any assurance that Randa’s equity owners would backstop any of the contingencies based on Randa’s operations,” the committee said Wednesday.
It also said Randa “has not committed” to pay the break-up fee to Feldenkreis if the company opts to change course and go with a Randa deal instead of a Feldenkreis one, “leaving the company shareholders to bear the expense.” The committee said if that scenario were to play out and Randa was not able to complete the deal, it would cost shareholders $8.7 million, or 55 cents a share, which makes Randa’s higher purchase price a moot point.
It reiterated that Randa’s agreement is “materially less favorable to the company and its shareholders than the Feldenkreis merger agreement.”
The Special Committee then lashed out at Randa, saying that the company “has persistently violated the terms of its nondisclosure agreement” with PEI that “expressly restricts Randa from making public statements or discussing its proposed merger transaction, or the company’s business, with any of the company’s business relations, including key licensors.”
The release ended with the Special Committee saying that “reengaging with Randa at this time is not in the best interest of shareholders.”
Heath Golden, president of Randa Digital Labs, said, “It’s dismaying that the Special Committee continues, on the one hand, to point to the conditionality of our offer as the reason they will not engage with us; while, on the other hand, they continue to actively obstruct our ability to remove that conditionality.”
Golden noted that Randa’s goal is to deliver maximum benefit to all stakeholders, adding that the “Special Committee appears to harbor a different goal.”