The founder and former CEO of Gildan, Glenn Chamandy, denies having given an ultimatum to the board of directors of the Montreal clothing manufacturer regarding some potential acquisition strategies.
“This is a diversion to distract from shareholder reaction to the board’s handling of succession planning, in which I was not involved,” Glenn Chamandy argues in a written statement Monday.
“I neither orchestrated nor controlled the events; the board led the process,” he continues.
Glenn Chamandy was shown the door early last week by the board which appointed Vince Tyra, a 58-year-old American, to take over. The departure of Glenn Chamandy was then simply explained by a disagreement over the timing of the implementation of the succession plan.
In turn, institutional shareholders Turtle Creek, Browning West, Jarislowsky Fraser and Pzena Management all criticized Gildan’s decision last week.
Luc Jobin, member of the board of directors and former CEO of CN, said in an interview with La Presse on Sunday that Glenn Chamandy served a calculated ultimatum to the board of directors in addition to accusing Glenn Chamandy of having wanted to carry out risky acquisitions.
“The council had to agree to two requests otherwise it was going to leave,” said Luc Jobin.
This administrator states that Glenn Chamandy’s first request was to move forward with a strategy of multiple acquisitions of several billion dollars outside Gildan’s field of expertise and operational scope, therefore in sectors adjacent.
These acquisitions, according to Luc Jobin, would be “highly dilutive” for shareholders due to the debt and equity issues required to complete them. Luc Jobin also said that the level of rigor used to examine the potential of acquisitions did not meet the board’s expectations.
He also said that carrying out this strategy involves risk because it requires skills that are not fully mastered by Glenn Chamandy.
Still according to Luc Jobin, the second condition set by Glenn Chamandy was to review in two years the development status of an internal candidate, but that Glenn Chamandy could not tell the board with certainty whether this candidate would have reached the level necessary to succeed him. as CEO.
The board having responded to Glenn Chamandy that it had to carry out its work of evaluating external candidates before taking a position, Luc Jobin maintains that the relationship with Glenn then deteriorated quickly.
Luc Jobin says that American institutional investor Coliseum Capital – currently Gildan’s second largest shareholder with an approximate 6% stake – supports the board of directors and intends to increase its stake in Gildan by purchasing shares on the market to become the largest shareholder ahead of Jarislowsky who has a stake of around 7%.
Luc Jobin says Gildan directors invited Coliseum co-founder and managing partner Chris Shackelton to join the board.
Gildan board members plan to spend time this week with institutional shareholders to explain the directors’ point of view.
