Browning West Reacts to the Gildan Activewear Board’s Attempt to Simultaneously Delay and Cancel a Validly Requisitioned Special Meeting
- None.
- The Board's decision to delay the annual and special meeting of shareholders is criticized for being contradictory and wasteful, increasing the risk of permanent damage to the company. Browning West asserts that the Board's actions demonstrate disregard for corporate governance and shareholder will.
Insights
The decision by Gildan Activewear Inc.'s Board to delay a Special Meeting requested by Browning West, a shareholder with significant holdings, indicates a potential governance issue that could impact investor sentiment and the company's stock performance. The Board's actions suggest a reluctance to address shareholder concerns in a timely manner, which could be perceived as a lack of transparency and responsiveness. This behavior might result in a loss of investor confidence, potentially leading to a negative impact on the company's market valuation.
Additionally, the Board's choice to engage in litigation to cancel the Special Meeting, while simultaneously acknowledging the need for a swift resolution, raises questions about the strategic alignment of the Board's actions with shareholder interests. This internal conflict could lead to further uncertainty among investors regarding the company's future direction and leadership stability, which is often reflected in stock price volatility.
The Board's decision to pursue litigation over a regulatory question, despite the requisition being valid under Canadian law, suggests a complex legal strategy that might not align with shareholder interests. This approach could result in unnecessary legal expenses and divert attention and resources from the company's core operations. The legal standoff between the Board and Browning West over the Special Meeting could set a precedent for future shareholder activism and influence how corporate governance disputes are handled within publicly traded companies, particularly those with cross-border regulatory considerations.
The delay in holding a Special Meeting and the subsequent legal actions could have financial implications for Gildan. The market typically reacts unfavorably to signs of internal strife and governance issues, which can lead to increased cost of capital due to perceived risk. Furthermore, the mention of 'permanent damage to the company' by Browning West suggests that the current leadership vacuum and governance concerns may already be affecting Gildan's operational efficiency and profitability. Investors will be keenly observing the company's next steps, as prolonged governance disputes can have detrimental effects on financial performance and long-term shareholder value.
Notes the Board’s May 28th Meeting Date is Nearly Five Months from the Date of Browning West’s Requisition
Questions the Board’s Contradictory Decision to Pursue Irrelevant and Wasteful Litigation to Cancel the Special Meeting, While Claiming the Board Agrees With Feedback from a Critical Mass of Shareholders That a Speedy Resolution is in the Company’s Best Interest
Warns the Board’s Apparent Desperation and Refusal to Convene a Timely Meeting Increase the Risk of Permanent Damage to the Company
As a reminder, Browning West is seeking to reconstitute Gildan’s Board and replace the following directors with ethical and qualified candidates: Donald Berg, Maryse Bertrand, Marc Caira, Shirley Cunningham, Charles Herington, Luc Jobin, Craig Leavitt, and Chris Shackelton.
Usman S. Nabi and Peter M. Lee of Browning West commented:
“Through its actions, including refusing to set a timely date for the Meeting, the Board is once again demonstrating a complete disregard for sound corporate governance and a total lack of respect for the will of shareholders. It appears the Board has learned nothing from its recent string of ill-conceived decisions and publicity stunts, which seem to have only succeeded in alienating shareholders. Indeed, it is as if the Board is oblivious to the fact that holders of approximately
With respect to Gildan’s comments regarding Browning West’s requisition and the Company’s planned court application, we are severely disappointed by the Board’s continued attempts to distract shareholders by focusing on a
The Board should recognize Gildan’s stakeholders have been suffering through a vacuum of credible leadership for almost two months, and each day of delay risks permanent damage to the Company. We urge the Board to reconsider its self-serving decision and hold our requisitioned Special Meeting without unjustifiable delay.”
No Solicitation
This press release is for informational purposes only and is not a solicitation of proxies. If Browning West determines to solicit proxies in respect of any meeting of shareholders of the Company, any such solicitation will be undertaken by way of an information circular or as otherwise permitted by applicable Canadian corporate and securities laws.
Disclaimer for Forward-Looking Information
Certain information in this news release may constitute “forward-looking information” within the meaning of applicable securities legislation. Forward-looking statements and information generally can be identified by the use of forward-looking terminology such as “outlook,” “objective,” “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “plans,” “continue,” or similar expressions suggesting future outcomes or events. Forward-looking information in this news release may include, but is not limited to, statements of Browning West regarding (i) how Browning West intends to exercise its legal rights as a shareholder of the Company, and (ii) its plans to make changes at the Board and management of the Company.
Although Browning West believes that the expectations reflected in any such forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. Such forward-looking statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements including, without limitation, the risks that (i) the Company may use tactics to thwart the rights of Browning West as a shareholder and (ii) the actions being proposed and the changes being demanded by Browning West, may not take place for any reason whatsoever. Except as required by law, Browning West does not intend to update these forward-looking statements.
Advisors
Olshan Frome Wolosky LLP is serving as legal counsel, Goodmans LLP is serving as Canadian legal counsel, and Longacre Square Partners is serving as strategic advisor to Browning West. Carson Proxy is serving as proxy advisor.
About Browning West, LP
Browning West is an independent investment partnership based in
Browning West seeks to identify and invest in a limited number of high-quality businesses and to hold these investments for multiple years. Backed by a select group of leading foundations, family offices, and university endowments, Browning West’s unique capital base allows it to focus on long-term value creation at its portfolio companies.
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Browning West
info@browningwest.com
310-984-7600
Longacre Square Partners
Charlotte Kiaie / Scott Deveau, 646-386-0091
browningwest@longacresquare.com
Carson Proxy
Christine Carson, 416-804-0825
christine@carsonproxy.com
Source: Browning West, LP
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