MONTREAL 鈥� A U.S. investor looking to replace a majority of the board of directors at Gildan Activewear Inc. said it has filed a lawsuit against the clothing manufacturer and its board to ensure it holds its annual meeting "without delay and with the oversight of an independent chair" on May 28.
In a press release, Browning West said its application in Quebec Superior Court alleges Gildan and its board have pursued "a strategy of entrenchment, obfuscation and disparagement of dissenting shareholders" while prioritizing their own personal interests.
The investor said it believes the board鈥檚 "tactics indicate that the current directors will do anything to preserve their current positions." It also said it's concerned the company will try to delay the May meeting.聽
Gildan has been embroiled in a fight over who should lead the company since it announced late last year that co-founder and then-CEO Glenn Chamandy would be replaced by Vince Tyra, saying the former had no credible long-term strategy and had lost the board's trust.
Browning West, with the support of Gildan's largest shareholder Jarislowsky Fraser, has been trying to replace eight members of the Gildan board in a move to reinstate Chamandy. It has said it would offer a slate of candidates for election at the company's annual meeting after initially seeking a special meeting of shareholders.聽
Turtle Creek Asset Management Inc., another shareholder that has asked Gildan to reinstate Chamandy, has called his termination a "grievous error," saying it appeared to be done in haste without consideration of shareholders or the impact on the company.聽
Gildan has called the campaign to reinstate Chamandy misguided. It previously said its decision came after Chamandy allegedly moved to pursue "high-risk and highly dilutive multi-billion-dollar acquisitions that would shift Gildan away from its core area of manufacturing experience."
Chamandy has said he presented a comprehensive long-range plan in October that showed meaningful growth prospects for Gildan over the next five years.
He has also accused Gildan's board of creating "a sideshow to distract from the reaction the shareholders have had with respect to the board's handling of succession planning, in which I was not involved."
Tyra began work as Gildan's chief executive mid-January, four weeks ahead of his planned start date on request by the company's board.聽
In January, Gildan accused Chamandy of having inappropriately close relationships with some of the shareholders calling for his return, such as failing to disclose that he invested in funds managed by an unnamed shareholder.聽
They also provided details about why Chamandy had lost the board's confidence.聽
The company said he was rarely in the office, held very few meetings, and sent very few emails.聽
Gildan was founded by Chamandy's grandfather in 1946 under another name. Chamandy and his brother took over in 1982.聽
This report by The Canadian Press was first published March 12, 2024.
Companies in this story: (TSX:GIL)
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