Turtle Creek has written an open letter to Gildan's board of directors stating that it remains "steadfast" in its "resolve to see substantial Board change".
Turtle Creek also claimed the Gildan Board's recent initiation of a sales process is its "latest attempt to avoid the judgement of its shareholders" at the annual meeting, which is scheduled to take place on 28 May.
The letter reads: "This Board does not have a mandate, nor the confidence of Gildan shareholders, to run a process that could result in the sale of Gildan. The Board’s outrageous and unprecedented actions to date, in the face of massive shareholder opposition are wholly disqualifying."
Turtle Creek wants urgent meeting to discuss Gildan board, proposed sale
"In fact, we strongly believe that the Board has initiated a sale process in a desperate attempt to avoid the profound professional embarrassment that will befall the directors once they are voted off the board by Gildan’s shareholders."
Turtle Creek claims that if the annual meeting of Gildan shareholders were held today, it has a high level of confidence that shareholders "would vote overwhelmingly in favour" of the individuals nominated by its fellow long-term shareholder Browning West.
The shareholder also alleged the public release of sale process details during regular market hours was characteristic of the Board’s "slapdash approach to governance".
It stated: "Unsurprisingly, this prompted regulators to halt trading in Gildan shares approximately 20 minutes later for the duration of the trading day. In the ensuing hours, detailed information about the names of third parties who had indicated interest in purchasing Gildan, along with indicative pricing levels, began appearing in the news media, demonstrating a lack of integrity in the purported process."
Turtle Creek claims these leaks ran counter to the interests of potential buyers it could be that the offers originated from Gildan or its advisors.
The shareholder added that just because an offer is received does not require the Board to seriously entertain it, especially when the company is in what it describes as "the midst of a boardroom battle".
Turtle Creek said it is "concerned that the sale process is, at best, a hasty attempt to sell the company at a price that does not reflect Gildan’s long-term potential, or, at worst, a cynical and irresponsible tactic intended to provide a pretext to further delay or influence the annual meeting of Gildan shareholders".
It was also keen to share it believes Gildan has a value of over $60 per share, stating "Clearly, Gildan is trading at a substantial discount to our view of its value".
Turtle Creek concluded: "We and other shareholders do not trust the current Board to act as independent fiduciaries for us. We demand the Board hold the annual meeting of shareholders on an urgent basis and allow shareholders to elect a new Board before further, permanent harm is caused to the company."
Gildan had not responded to Just Style's request for comment at the time of going to press.
Last week Gildan's board said it was reviewing a potential acquisition offer and it had already contacted and received interest from other potential bidders with a view to "maximising the value of any potential transaction".
However, fellow shareholder Browning West described the sales process as "reactionary" and said it underscored its message to shareholders that a meaningful reconstitution of the board was immediately required, even before the annual meeting in May."
It added: "Under no circumstances can the current board be trusted to oversee a sale process.”
Background behind shareholders' ongoing dispute with Gildan
The company faced backlash from investors, including Browning West with requests to reinstate Chamandy, which was denied by Gildan.
Gildan defended its appointment of Tyra and said its confidence in the former CEO had been “eroded gradually” after Chamandy’s plans to pursue “highly dilutive multi-billion-dollar acquisitions,” which Gildan said would sift the company away from its core manufacturing expertise.
“The board’s decision to hire a new CEO is based on our joint responsibility to see that Gildan is well positioned for future success. The business has grown in scale and complexity and the challenges and opportunities that lie ahead call for a new leader with new ideas and different skills,” Gildan said at the time.
In a separate statement published on 17 January, former CEO Chamandy was keen to defend himself and said: “It is with regret that I observe the board’s current focus on a strategy seemingly aimed at undermining my reputation and my record through insinuation and distortion of the truth.”
Browning West has remained critical of Gildan’s justification in naming Tyra as the company’s new CEO and described him previously as “an extremely poor leadership choice”.
