Circuit City Investor Calls for CEO Resignation
Richmond, Va. An activist investor on Wednesday said Circuit City Stores Inc. should replace its chief executive and make other changes to help “unlock hundreds of millions of value.”
Wattles Capital Management, led by Mark J. Wattles, which owns a 6.5% stake in the company, said in a letter to the board of directors that turnaround efforts under CEO Philip Schoonover were not working and that he should be replaced.
“There is the potential to unlock hundreds of millions of value in the near term and billions of value in the long term for Circuit City stockholders,” Wattles wrote. “However, we have serious concerns with the company’s current business strategy and operating performance.”
In response to the Wattles proposal, Circuit City said in a statement, “The board has received the letter and will respond in due course.”
The company reported a $207 million loss in its fiscal third quarter, and anticipates a “modest loss” in the fourth quarter, the period that includes the bulk of the crucial holiday-shopping season.
Wattles, founder of the Hollywood Entertainment video-rental chain, wants to nominate five members for Circuit City’s 12-member board and oust all the current directors.
In the letter, Wattles suggested the company hire an investment bank to evaluate any possibility for a takeover offer and said the company’s turnaround plan has been “disastrous.”
He also urged the board not to “summarily dismiss any legitimate, third-party interest in acquiring or merging with the company,” as it had done twice in the last five years.
The proposals, if accepted, would be aired during Circuit City’s annual meeting in June.
Borders delays 10-K filing
ANN ARBOR, Mich. Borders Group has announced that it is delaying the filing of its Annual Report on Form 10-K for fiscal year 2007, ended Feb. 2. The company said it expects to make the filing on or before April 17 after it has completed its evaluation of financing alternatives and can include finalized transactions in its 10-K filing.
The news that Borders is delaying the filing of its 10-K comes shortly after the company announced that it is looking into the possible sale of the company or certain divisions in order to maximize shareholder value. The company said it has retained J.P. Morgan Securities and Merrill Lynch as financial advisors.
In addition, the company announced that Borders Group has received a financing commitment from Pershing Square Capital Management on behalf of certain of its affiliated investment funds. Under the terms of the commitment, Pershing Square has made a commitment to lend $42.5 million to the company and an offer to purchase, at the company’s discretion, certain of the company’s international businesses pursuant to a $125 million backstop purchase commitment, in each case subject to the satisfaction of customary closing conditions.
Rite Aid comes to aid of allergy sufferers
Camp Hill, Pa. Rite Aid is coming to the aid of allergy sufferers, announcing that it has launched a two-month comprehensive initiative to help seasonal allergy sufferers understand and manage their reactions to allergens and survive the season.
During April and May, all Rite Aid stores will offer a free Allergy Guide that features information on how to avoid and treat allergies as well as a free Allergy Relief Plan, which offers advice on how to manage allergies inside and outside. Rite Aid created the guides in collaboration with the American Academy of Allergy, Asthma & Immunology (AAAAI), the largest professional medical specialty organization in the United States dedicated to advancing the knowledge and practice of allergy, asthma and immunology.
“Rite Aid is committed to offering our patients the programs, resources and support to help them live healthier, happier lives,” said John Learish, senior vp of marketing. “At Rite Aid, our pharmacists are able to give patients recommendations on how to alleviate their allergy symptoms and help them find the best relief possible this allergy season.”