Sunday, May 24, 2009

Forzani Group

Crescendo Partners LP, a New York based hedge fund, and its principal, Eric Rosenfeld, have announced that Crescendo controls 5.1% of the outstanding shares of Forzani Group Ltd., a Calgary based sporting goods retailer, and it is seeking two seats on the board of directors.

Forzani's annual meeting is scheduled for June 10.

I won't get into the dispute here. I'm enjoying the holiday weekend and that would be a bit too much like work. I do want to say, though, that as an aficionado of such letters I enjoyed the panache with which Forzani has resisted Crescendo's demand.

The line of critique is a familiar one, "Their nominees are inexperienced kids -- ours are battle-hardened veterans. Yet Chairman John Forzani, or whoever wrote this for him, makes it sound fresh.

In contrast, Crescendo has put forward a US retail executive who has held five jobs in the past 11 years, none of them with companies having material operations in Quebec or elsewhere in Canada. Two months ago this executive was appointed CEO of a once famous but now struggling private toy store business. Immediately before that he spent a year heading the publicly-traded online retailer Perhaps it wasn't his fault, but while he was in charge the market value of the shares dropped by approximately 75%.

And Crescendo's other nominee?

Crescendo has [also] nominated a young man who obtained his MBA in the graduating class of 2005 (a fact that you won't find in Crescendo's dissident circular). Crescendo touts his experience as an officer of two privately held "blank cheque" companies; in other words, companies that typically exist on paper only and which have no operations. He apparently has no Canadian business background. In 1976, the year before this Crescendo nominee was born, Donald Gass was made a partner at Deloitte & Touche.

Gotta love it.

No comments: