Greenwich, Conn. On Tuesday, KarpReilly LLC said it has sent a letter to the stockholders of Charlotte Russe Holding, urging them to elect new director nominees who have the experience needed to maximize value for stockholders.
The three nominees are Allan Karp, Hezy Shaked and Gabriel Bitton. Karp is co-founder of KarpReilly, the private-equity firm that owns approximately 8.9% of the outstanding shares of Charlotte Russe Holding stock, making it the largest stockholder.
Shaked is co-founder and chairman/CEO of surf-and-skate apparel retailer Tilly’s, and Bitton is president of Buffalo David Bitton, a retailer and wholesaler of premium jeans and other men’s and womenswear. Both are KarpReilly executives.
The letter urged shareholders to support the three nominees, stating that the current board’s interests are not aligned with stockholders. “We are increasingly alarmed by the actions taken by the Charlotte Russe board of directors, which we believe have not been in the best interests of stockholders,” read the letter.
The text went on to say that, contrary to arguments by Charlotte Russe that the nominations were made out of opposition to the sale of the company, rather because the public announcement of a potential sale of the company was made after the nominations, that was not the case.
Karp and his co-nominees oppose a distress sale, according to the letter.
Criticisms of the current board include lack of a coherent plan, alienation of senior management, overpaid and inexperienced replacement management, hiring of expensive outside consultants, and refusal to consider bona fide acquisition proposals in favor of selling at lower valuations.
In November 2007, KarpReilly made a private proposal to acquire Charlotte Russe at what the letter described as a “substantial premium to the recent trading range for the company's stock." The board rejected the proposal.
The KarpReilly letter to stockholders also urged stockholders to ignore any proxy sent by Charlotte Russe Holding.