West Palm Beach (HedgeCo.Net) – Things are heating up in the battle between Charming Shoppes Inc. and the two hedge funds that are trying to elect their management to the company’s board.
Only 2 days before the board is set to be elected at the annual shareholders meeting, the hedge funds, Crescendo Partners and Myca Partners, have rejected a proposed settlement by the women’s plus size apparel manufacturer.
The proposal offered a seat on the board to Michael Appel, one of the nominees the hedge funds supported. In addition to the board seat, Charming Shoppes had stated they would appoint two individuals, not affiliated with Charming Shoppes to the board. Both Richard W. Bennet, III, former Vice Chairman of The May Department Stores Company and Mr. Michael Goldstein, former Chairman and Chief Executive Officer of Toys "R" Us, Inc, had no prior relationship with the company.
"We are disappointed that the Committee rejected our settlement offer,” said Charming Shoppes in a recent press release. “After having spoken with many of our largest shareholders, we believe our offer to add Mr. Appel, together with Mr. Bennet and Goldstein, to the Board is aligned with the majority of our shareholders’ wishes and interests.”
Myca and Crescendo have other plans for Charming Shoppes. The hedge funds wish to nominate Arnaud Ajdler, Managing Director of Crescendo, and Robert Frankfurt, President of Myca, in addition to Appel.
“We believe the current Board of Directors and senior management are responsible and must be held accountable for a flawed business strategy and poor execution,” the hedge funds, who call themselves the Full Value Committee, said in a statement.
In addition to Charming Shoppes current settlement offer being declined, a judge has also thrown out their suit against Myca and Crescendo, which was an attempt to keep the funds from nominating their board selections. Charming Shoppes had asserted that the funds had filed ““misleading and incomplete documents” with the Securities and Exchange Commission to win shareholder support for their nominees.
“Today’s decision confirms what we have believed all along — that this lawsuit was nothing more than a desperate and frivolous attempt to block the democratic process, scare shareholders from talking to us and further entrench the Board,” the committee said in a statement.
Despite the recent setbacks, Charming Shoppes Inc. has asserted that they are undeterred and are confident shareholders will make the right decision on May 8th.
Crescendo and Myca own about a 7.9% stake in the company, or just over 9 million shares.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: [email protected]
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