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Charlotte Russe’s Suitor Returns, With Pointed Questions

A shareholder of Charlotte Russe Holding Inc., the women’s wear retailer, called on the company’s board of directors Dec. 23 to explain why it rejected a nearly $200 million buyout of the company last month.

In a letter filed with the Securities and Exchange Commission, Bryant Riley of B. Riley & Co. said his firm is “deeply troubled by recent actions taken by directors and members of management, including the corporate governance missteps and the strategic and operational direction of the company.”

In November, Charlotte Russe’s board rejected a bid from KarpReilly Capital Partners LP and HIG Capital LLC to buy the company for $9 to $9.50 per share. That price, which was a premium of 31 percent to 38 percent above the company’s stock price on the prior day, put the aggregate offer from $188 million to $198 million.

In rejecting the bid, the company’s board said it wanted to stick to its turnaround plan, and hire new management.

Charlotte Russe shares, traded on Nasdaq under CHIC, closed Dec. 23 at $6.16, giving it a market capitalization of $129 million. The stock has ranged from $3.98 to $20.61 over the past 52 weeks.

Other points that Riley asked the board to address include implementing a poison pill amendment to the company’s bylaws; the conditions that prompted the retirement of the firm’s former chief executive officer, and the defection of its chief financial officer; and the vetting process of the selections of both its new chairman and an interim CEO/ CFO, including justification for paying the person an annual salary of $700,000.

, Mike Allen

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