U.S. investment fund Browning West, which is leading a shareholder revolt against the leadership of Gildan Activewear GIL-T, says the T-shirt maker’s allegation that the investor has violated American securities law is “baseless” and part of a publicity stunt.
Browning West made the comments after Gildan sent a complaint Thursday to the U.S. Securities and Exchange Commission accusing the shareholder of spreading false information about Gildan’s new chief executive, Vince Tyra.
“Anyone can write a letter to anyone making baseless allegations and then leak that letter to the press as a public-relations stunt, whether or not there is any truth at all to the claims,” Andrew Freedman, a lawyer acting for Browning West, said in a statement. “There is simply no truth or merit to anything that has been alleged in Gildan’s letter to the SEC.”
Gildan’s letter asked the commission to investigate allegations that Browning West had been spreading “false and highly prejudicial personal attacks” against Mr. Tyra and its board, in violation of a section of the law that bans individuals from making untrue or misleading statements in connection with the purchase or sale of a security.
What’s happening at Gildan? A timeline of the months-long CEO corporate battle
Browning West’s rebuttal to Gildan’s letter caps off a week of warring words between the investor and Montreal-based wholesaler.
Gildan has been trapped in a leadership crisis since December, when the board announced it was pushing out long-time chief executive Glenn Chamandy, in favour of Mr. Tyra, a former president of Fruit of the Loom. Within days, Browning West launched a campaign to reinstate Mr. Chamandy and seize control of the board. It is leading a group of nine disgruntled investors, representing about 35 per cent of Gildan shares.
This week’s jockeying began late Tuesday, after The New York Post reported that Browning West and other shareholders were accusing Gildan’s board of failing to properly vet Mr. Tyra.
The Post story included allegations contained in a report prepared by management-analysis company Paragon Intel that accused Mr. Tyra of having an affair with a subordinate female manager. The relationship occurred 20 years ago and at a different company, but that woman, Patti Lambert Simetz, is now a senior executive at Gildan.
However, in an interview with The Globe and Mail, Mr. Tyra and Ms. Simetz said that this was a deliberate mischaracterization of the relationship in order to score points in a proxy war. Both said that at the time they briefly dated in 2002, the company where they worked – Broder Bros – had no policy against workplace relationships. Mr. Tyra and Ms. Simetz said they were consenting, single adults and that the three-month relationship was not a secret in the office.
Gildan accused Browning West of planting the story. Browning West then shot back with accusations that Gildan’s board had presided over “an egregious failure of due care and judgment” by overlooking Mr. Tyra’s relationship with Ms. Simetz.
On Thursday, Gildan escalated things further with its letter to the U.S. regulator. Commission spokesperson Ryan White declined to comment “on the existence or non-existence of a possible investigation.”
This battle for control of Gildan is set to play out for at least two more months. Browning West wants to replace a majority of the 12 directors on Gildan’s board and intends to run a new list of eight nominees at the coming annual meeting on May 28. On Friday, Browning West issued a press release stating that they were confident they would see all of their board picks appointed.
Oakcliff Capital, a New York investment company, is among the shareholders that believe Gildan’s board messed up in dismissing Mr. Chamandy.
Bryan Lawrence, the company’s founder, and John Jamgochian, a partner there, sent a letter Friday to Gildan’s board in which they said recent exchanges between directors and shareholders reported in the media are “a distraction” that deepens their conviction that the board is not acting in the best interest of its stakeholders.
“At the vote in May, we will vote to replace you,” they wrote in the letter, seen by The Globe. “You could also bring this process to an end earlier by resigning.”
Anson Funds, a privately held alternative asset manager, also backs Browning West’s efforts to reshape Gildan’s board.
In an e-mailed statement Friday, Moez Kassam, Anson’s chief investment officer, blasted Gildan for refusing to meet with his company and said: “The board must work with its shareholders to expeditiously solve this leadership crisis of their making.”
Robyn Doolittle
Nicolas Van Praet