Turtle Creek Asset Management Inc. has rebuked the Gildan Activewear board in an open letter to directors over their refusal to honor a request for a special shareholders’ meeting to vote on the composition of the company’s board.
“You have a legal and moral responsibility to act as independent fiduciaries for shareholders, even when those shareholders disagree with you and seek to have you replaced,” Turtle Creek said in its letter to board members on Tuesday. “Allow the shareholders, the owners of the company, to exercise their statutory rights to vote for their representatives.”
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Turtle Creek was among the first of several hedge funds to ally with Browning West in denouncing the firing of former Gildan CEO Glenn J. Chamandy. The two and others—the nine hedge funds combined hold 35 percent of the voting shares—are seeking the ouster of newly-named CEO Vince Tyra and the reinstatement of Chamandy as CEO.
Browning West earlier this month requested a special meeting to vote on a reconstituted board, but Gildan hasn’t yet set a date for the meeting. Instead, it has chosen to disclose details on why it fired Chamandy, and called his version of the circumstances leading to his dismissal a “false narrative”. And on Monday, Gildan chose to attack Browning West, charging it with alleged U.S. antitrust violations connected to its acquisition of Gildan shares. A spokeswoman for Browning West has since confirmed that the hedge fund told Gildan that it “did not breach the HSR Act because the firm is exempt from filing and waiting period requirements.” The HSR Act in Canada is similar to the U.S. antitrust merger control provisions under the Hart-Scott-Rodino Act.
In Turtle Creek’s rebuke, it pointedly stated in its letter that while the Gildan board is entitled to make its case regarding the reasons behind its decision to end Chamandy’s tenure, “you are not entitled to stop the shareholders from voting on who they wish to represent them on the board of their company.”
The hedge fund added: “And while we respect your right to communicate your reasons, we urge you to conduct yourselves in a professional manner. Your current destructive PR campaign of inferences and innuendo is, quite frankly, embarrassing to the company and to each of you. For the sake of each of your reputations, and for the sake of the company, we urge you to end it.”
And like Browning West, Turtle Creek concluded that the denial of the request for the special meeting “is nothing more than an attempt to entrench yourselves.”
A spokewoman for Gildan did not respond to a request for comment by press time.