A number of Gildan Activewear Inc. GIL-T shareholders are escalating their dissatisfaction with the company by expressing support for a slate of dissident directors who would sack Gildan’s board chairman and new chief executive officer.
Los Angeles-based investment firm Browning West LP said Dec. 29 it will seek a special shareholders’ meeting at Gildan to elect five new directors for the company’s 11-member board. Now, five additional institutional shareholders are coming out publicly in support of Browning’s director slate.
The list includes Montreal-based Jarislowsky Fraser, Gildan’s largest shareholder with a holding equal to 7.3 per cent of the company, and Winnipeg’s Cardinal Capital Management, which told The Globe and Mail Friday that it’s a supporter of the plan. All told, the six investors supporting the dissident slate own a combined 16.6 per cent of Gildan, according to the most recent ownership disclosures.
The goal is to reverse the firing of former CEO and co-founder Glenn Chamandy. Gildan announced Mr. Chamandy’s firing Dec. 11. Gildan’s board subsequently said he opposed the board’s succession plans for him, and the board was uncomfortable with Mr. Chamandy’s acquisition-driven growth plans. The board hired Vince Tyra, a former Fruit of the Loom executive, to replace him.
A shareholder revolt followed. Browning West publicly criticized the move, pointing to Mr. Chamandy’s long-term track record and the performance of Gildan shares. Eight other institutional investors followed with their criticism of the move.
A spokesperson for Gildan could not be reached for comment late Friday. When Browning West first announced its plans Dec. 29, Gildan’s board chair, Donald Berg, said in a statement that its board “stands behind its considered decision to relieve Glenn Chamandy as CEO and to appoint Vince Tyra as the new CEO,” and that “the facts of this situation completely support the Gildan Activewear Board of Directors’ decision.”
Jarislowsky “intends to support Browning West and its intent to requisition a special meeting of Gildan shareholders to appoint five new director candidates,” Charles Nadim, Jarislowsky’s head of research and portfolio manager for Canadian equities, said in a statement.
In an e-mailed statement, Evan Mancer, president and chief investment officer of Cardinal Capital Management, told The Globe “we are currently in support of Browning’s proposed director slate.” Cardinal owns about 1.7 per cent of Gildan, according to S&P Global Market Intelligence.
Turtle Creek Asset Management, Oakcliff Capital and Anson Funds Management LP/Anson Advisors Inc. support the dissident slate as well, according to public statements, news reports or responses to The Globe’s queries.
Cooke & Bieler LP, Pzena Investment Management LLC and Janus Henderson – the three remaining investors of the nine who expressed opposition to Mr. Chamandy’s firing – either did not respond to a request for comment or declined to state their intentions publicly. Combined, they hold 16.5 per cent of Gildan, according to disclosures.
The ownerships levels of all the angry investors would be higher if they’ve since added to their positions. Browning West, for example, says it now holds about 5 per cent of Gildan, versus the 3.9 per cent in the most recent disclosure.
The more votes the dissidents get, the greater the amount of remaining shareholders Gildan must win over. If 16.6 per cent vote for the dissidents, Gildan must get about 60 per cent of the remaining votes to win. If 33 per cent – the combined disclosed holdings of all nine unhappy investors – vote for the dissidents, Gildan will need to take 77 per cent of the remaining vote.
Coliseum Capital Management, LLC, with a disclosed 5.8 per cent, says it will back Gildan. Chris Shackelton, a co-founder and managing partner of Coliseum, joined Gildan’s board in December.
Editor’s note: A previous version of this article incorrectly stated that Cardinal Capital Management is based in Toronto. Its headquarters are in Winnipeg. This version has been updated.