The strong reaction was prompted after Gildan issued a statement alleging violations of US antitrust law by Browning West and called its campaign to reinstate Glenn Chamandy as CEO of Gildan “misguided” in the latest step of the ongoing feud.
It comes after Gildan alleged Browning West wanted to reinstate Chamandy due to its “close relationship” with the company which is why Gildan wanted him replaced.
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The Gildan Board has now officially named Vince Tyra as the company’s new CEO, insisting he is the right man to lead the company forward.
Gildan now alleges Browning West’s methods of acquiring voting securities flouted rules under the HSR Act, a US antitrust statute that requires investors to notify the US Federal Trade Commission and US Department of Justice and comply with a 30-day waiting period before acquiring voting securities above a certain ownership threshold.
In a statement, Gildan said: “Browning West’s rapid and illegal share acquisitions were undertaken as a necessary part of its scheme to take control of the Company and its Board and reinstall Mr. Chamandy. Under the Canada Business Corporations Act, shareholders are entitled to requisition a special meeting of shareholders only if they hold over 5% of a company’s shares. Browning West’s illegal share acquisitions barely put it over this threshold. On January 9, 2024, Browning West sought to requisition a special meeting to take control of the Company and its Board by removing eight sitting directors and appointing eight new directors hand-picked by Browning West, including one of its co-founders and Mr. Chamandy.
“Without the shares acquired in violation of the HSR Act, Browning West would have no legal rights to requisition a meeting. The Board intends to explore all avenues to ensure that shareholders are protected from Browning West’s illegal activity, potentially including notifications to applicable regulators and legal proceedings in the United States and Canada.
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By GlobalData“Browning West’s illegal share acquisitions add to the many serious questions raised about the purpose, planning and prudence of Browning West’s campaign. Less than one week after Mr. Chamandy was removed by the Board, and after only a 15-minute meeting with the Chair of the Board, Browning West rushed recklessly into reinstalling Mr. Chamandy that it violated US antitrust law.
“At this stage, questions remain about contacts between Browning West and Mr. Chamandy before and after his removal as CEO, contacts between Browning West and other investors, and whether these contacts violate Canadian and US securities laws. What is clear is that Browning West and Mr. Chamandy desire to seize control of Gildan as rapidly as possible, and it appears they will step over the law to do so.”
However, Browning West confirmed to Just Style it had informed Gildan it did not breach the HSR Act because the firm is exempt from filing and waiting period requirements.
Browning West also responded to the allegations in an open letter to Gildan’s shareholders, which was shared with Just Style. In the letter it says the latest move from Gildan is a “desperate and egregious entrenchment manoeuvre” to “deprive” shareholders of the opportunity to replace the board.
“Although we would normally just privately address this seemingly flawed and self-serving allegation, it has become clear to us that the Board has no respect for corporate democracy or the shareholder franchise. It is obvious that Browning West poses no substantive antitrust concerns to any concerned authority, which is why the Board’s gambit only reinforces our previously articulated case for removing a majority of directors,” the letter states.
Browning West also criticised Gildan’s board of an “absurd level of expenditure being borne by shareholders” in engaging law firms, investment banks and PR firms to retain its current board of directors.
The letter adds: “Every day that Gildan delays the Special Meeting, the value destruction and risk of permanent damage to the business continues under the “leadership” of the current Board.”
“It is important to highlight that the Board’s troubling conduct extends well beyond this latest stunt. In addition to spending the past two weeks publicizing misinformation about Browning West and Gildan’s founder and former CEO Glenn Chamandy, the Board has been brazenly dismissing our reasonable requests to set a date for the Special Meeting.”
Browning West also claimed that Gildan’s board is “actively trying to silence vocal shareholders by sending them threatening and meritless legal letters,” and accused Gildan of being in breach of confidentiality law.
The letter adds: “Browning West is in no way deterred or intimidated. Gildan has been one of Canada’s greatest value-creation case studies, but, unfortunately, the Board is now turning it into one of Canada’s greatest corporate governance failures. Despite the Board’s intransigence and clear desire to avoid being held accountable at a Special Meeting, we are completely committed to taking all necessary steps, including through the legal and regulatory channels, to protect our investment and set a strong foundation for long-term value creation at Gildan.”
