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 Bluefly.com. 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.
Showing posts with label Crescendo Partners. Show all posts
Showing posts with label Crescendo Partners. Show all posts
Sunday, May 24, 2009
Wednesday, January 14, 2009
Second agreement
The December agreement between O'Charley's and Crescendo Partners was actually the second accord between this particular issuer and this particular hedge fund.
They entered into a settlement agreement back in March pursuant to which the restaurant company's board took on three Crescendo representatives (Arnaud Ajdler, Gregory Monahan and Douglas Benham), and agreed to declassify itself.
The company had a nine-member board at the start of 2008, but as part of the March agreement it expanded the size of that board to eleven, and one of the incumbents stepped aside, making room for the three Crescendo reps.
Now, with the renewed discontent of Crescendo, and the revised treaty, the hedge fund has taken another step toward outright control. They're going to get a fourth rep, and the board itself is going to shrink to 10 members. So they'll only need one convert from the non-Crescendo members to produce a tie vote on a given issue.
The fourth Crescendo rep is: Philip J. Hickey Jr.
Mid-market restaurant chains are often squeezed in times like these. Consumers trade down. Those who previously ate at the upper end of the market may go to the mid-market places, but that is more than compensated for by consumers who used to eat at the mid-market who go to the bottom feeder drive-through places or just stay home.
My guess is that Crescendo sees O'Charley's as a long-term play. Eventually, there will be a recovery and the customers will return, and Crescendo wants to be in a position to profit when that happens.
Be fearful when everybody else is greedy, but be greedy when everybody else is fearful.
They entered into a settlement agreement back in March pursuant to which the restaurant company's board took on three Crescendo representatives (Arnaud Ajdler, Gregory Monahan and Douglas Benham), and agreed to declassify itself.
The company had a nine-member board at the start of 2008, but as part of the March agreement it expanded the size of that board to eleven, and one of the incumbents stepped aside, making room for the three Crescendo reps.
Now, with the renewed discontent of Crescendo, and the revised treaty, the hedge fund has taken another step toward outright control. They're going to get a fourth rep, and the board itself is going to shrink to 10 members. So they'll only need one convert from the non-Crescendo members to produce a tie vote on a given issue.
The fourth Crescendo rep is: Philip J. Hickey Jr.
Mid-market restaurant chains are often squeezed in times like these. Consumers trade down. Those who previously ate at the upper end of the market may go to the mid-market places, but that is more than compensated for by consumers who used to eat at the mid-market who go to the bottom feeder drive-through places or just stay home.
My guess is that Crescendo sees O'Charley's as a long-term play. Eventually, there will be a recovery and the customers will return, and Crescendo wants to be in a position to profit when that happens.
Be fearful when everybody else is greedy, but be greedy when everybody else is fearful.
Tuesday, January 13, 2009
Burns out at O'Charley's
I'm a little late with this -- it was on December 24 -- but hey, sue me.
A restaurant operator, O'Charley's Inc., has reaxched agreement with a hedge fund under threat of a proxy contest.
Under the agreement, long-time CEO Gregory Burns is stepping down, effective Fevruary 12.
The hedge fund involved is Crescendo Parties, of which we have ghad cause to speak on this blog before.
O'Charley's operates three restaurant chains, the eponymous O'Charley's, as well as Stone River Legendary Steaks and 99. I'm a regular patron of the Enfield, CT 99 restaurant, so this proxy fight strikes me as more interesting than some I have chronicled.
Burns has been around for a long time. He has been with O'Charley's for 25 years, and has been CEO for 16 of those. What led to his downfall?
An ugly stock chart(Nasdaq: CHUX), for one thing. The common stock was selling for $10 a share at the start of September. Three months later that was down below $2.
Of course, those three months were bad for a lot of listed companies. The Nasdaq 100 and the S&P indexes both show losses of 40% of their respective value over the same period. Still, CHUX lost 80% of its value, so stockholders naturally feel that the loss was twice as bad as it had to be.
More tomorrow.
A restaurant operator, O'Charley's Inc., has reaxched agreement with a hedge fund under threat of a proxy contest.
Under the agreement, long-time CEO Gregory Burns is stepping down, effective Fevruary 12.
The hedge fund involved is Crescendo Parties, of which we have ghad cause to speak on this blog before.
O'Charley's operates three restaurant chains, the eponymous O'Charley's, as well as Stone River Legendary Steaks and 99. I'm a regular patron of the Enfield, CT 99 restaurant, so this proxy fight strikes me as more interesting than some I have chronicled.
Burns has been around for a long time. He has been with O'Charley's for 25 years, and has been CEO for 16 of those. What led to his downfall?
An ugly stock chart(Nasdaq: CHUX), for one thing. The common stock was selling for $10 a share at the start of September. Three months later that was down below $2.
Of course, those three months were bad for a lot of listed companies. The Nasdaq 100 and the S&P indexes both show losses of 40% of their respective value over the same period. Still, CHUX lost 80% of its value, so stockholders naturally feel that the loss was twice as bad as it had to be.
More tomorrow.
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