Baltimore Hedge fund Plainview Capital LLC said late Monday that Charlotte Russe Holding Inc.'s plans for a turnaround are unlikely given the recession, and recommended Charlotte Russe look for potential buyers or consider a proposal it has previously spurned from two investment firms.
Late last month the retailer said its board unanimously opposed a nearly $200 million takeover offer by KarpReilly Capital Partners LP and H.I.G. Capital LLC.
The two firms announced their bid on Nov. 12, valuing it at $188.1 million to $198.6 million, a premium of 31% to 38% over Charlotte Russe's closing stock price the day before.
But Charlotte Russe rejected the bid, saying it wanted to stick to its turnaround plan, noting it began a review of the business last year and brought in new management with the goal of transforming the mall-based chain into a top-tier specialty retailer.
In a news release Monday, Plainview Capital LLC said it had "serious concern regarding the failure of the board of directors to maximize shareholder value of the company."
It said the offer represented a fair value for the retailer. Meanwhile, the company's transformation plan, it said, was a "risky alternative to accepting the buyout proposal, particularly in light of the severe downturn in the retail industry, prior strategic errors, and negative same-store sales/earnings trends for Charlotte Russe."