The Gildan Activewear proxy battle is heading to a shareholder vote on May 28, with both sides still battling it out.
Activist investor Browning West said on Thursday that lawsuits and claims filed by Gildan against the investment firm were dismissed by both the Quebec Superior Court and the Quebec Financial Markets Administrative Tribunal as having no merit.
The Superior court dismissed the Gildan board’s Hart-Scott-Rodino Act claim, saying the forum for determining the antitrust charge it alleged is the upcoming annual shareholders‘ meeting. The Tribunal dismissed an application for various orders in connection with Browning West’s solicitation of proxies and to prohibit its co-founder Peter M. Lee from standing for election to the Gildan board.
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Browning West co-founders Usman S. Nabi and Lee said in a statement that the rulings represent a repudiation of the tactics used by the former “entrenched” Gildan board to disparage dissenting shareholders in an attempt to avoid accountability.
In the time since the legal claims were filed earlier this year, Gildan has refreshed the composition of its board of directors, with the majority of its former directors stepping down last month.
“While it is unfortunate these directors have shamelessly wasted millions to attack shareholders in what is quickly becoming the most expensive proxy fight in Canadian history, we are encouraged that these legal sideshows have finally been laid to rest,” Nabi and Lee said.
When Gildan posted first-quarter earnings results earlier this month, the American Apparel owner disclosed that it spent $15.4 million in the first quarter ended March 31 and $1.7 million in the fourth quarter of 2023 on advisory and legal fees. That brings the total spent thus far just on its proxy battle to $17.1 million. That total does not include the $2.5 million tally connected to a possible sale of the company, which might have occurred even without the publicity of activist involvement.
The activist, who has the support of eight other institutional investors, is seeking to put in place its slate of board nominees. The goal, once its slate is on the board, is to ax current CEO Vince Tyra and to reinstall his predecessor, company co-founder Glenn Chamandy. Chamandy was fired by the former Gildan board in December, which triggered the battle for board control.
Gildan filed its investor presentation on Monday and the emphasis was that it has no corporate governance problem. In addition to a rehash of its attacks on Browning West, Gildan also focused on why Tyra is the right choice to lead Gildan. Browning West followed the same day, reiterating past claims—such as why Tyra needs to go—on why shareholders should vote for its board nominees.
In continuing the same tit-for-tat brouhaha that has plagued the proxy fight for months, Gildan on Friday downloaded another investor presentation on its site, likely in response to Browning West’s statements last week regarding Tyra.
In addition to its usual rehash, such as why activist co-founder Lee shouldn’t be on Gildan’s board, the underwear and tees manufacturer note that Tyra was selected through a two-year process. Gildan said that process included a consideration of 515 internal and external candidates, as well as 32 reference checks on Tyra alone. And Gildan said that Tyra is creating a “culture focused on talent development” at the company, moving it from a “family business to a professional institution.”
