MONTREAL — Gildan Activewear Inc. is escalating an ongoing public battle for control of the Montreal-based apparel company, accusing its recently terminated CEO of having inappropriately close relationships with some of the shareholders calling for his reinstatement.
Ex-CEO Glenn Chamandy failed to disclose that he invested in funds managed by an unnamed Gildan shareholder that is now calling for his return, the company said in a release Tuesday evening.
"Mr. Chamandy’s actions and lack of transparency with the board are further indication that new leadership was required at Gildan," the company said in the release.
Gildan said Chamandy also seems to have a closer relationship with U.S. investment firm Browning West than he does with other shareholders, resulting in special treatment.
Chamandy, who co-founded Gildan, was terminated on Dec. 10 after four decades at the company. He was replaced by Vince Tyra, who started the top job this week.
Chamandy did not immediately respond to a request for comment, but his email auto-reply referred to previous statements. He previously said he presented a comprehensive long-range plan in October showing Gildan's organic growth prospects for the next five years.
In the weeks after his departure became public on Dec. 11, several of Gildan's biggest shareholders, including Browning West, have called for Chamandy to be reinstated as CEO. Browning West is seeking a special meeting of shareholders to replace eight members of the Gildan board in order to bring Chamandy back.
Gildan describes Browning West in the release as an "activist hedge fund" leading an "aggressive and misleading campaign" to reinstall Chamandy as CEO.
Chamandy appears to have treated Browning West differently than Gildan's other shareholders, the company claims.
Around a week after Chamandy proposed a "high-risk acquisition plan" to the board and was "pressing them to retain him as CEO," he gave Browning West's co-founders and several of the firm's investors an exclusive visit to Gildan's Honduras manufacturing plant, the company said.
"The company has no record in recent history of any other Gildan shareholder and their own investors being hosted by the CEO to an exclusive visit to a Gildan facility," said Gildan, adding that Browning West appears to have been given a "vastly different view" on Gildan's potential future share price than what Chamandy told the board.
Browning West said it conducts site visits to gain a better understanding of its portfolio companies.
"As a result of our understanding of the operational complexity of Gildan’s manufacturing process, we know that Vincent Tyra – who lacks manufacturing experience and has a record of value destruction – is an extremely poor leadership choice," the investment firm said in a statement.
"It has likely become clear to all shareholders that the board is much more focused on self-preservation than accepting shareholders’ views and creating value.”
The firm owns a 5.02 per cent stake in Gildan as of Jan. 9, according to financial services firm Refinitiv. That's up from 3.9 per cent on Dec. 14, according to a Browning West press release that day.
Gildan's stock price currently sits at $42.25, down from $49.61 on the last trading day before the company announced Chamandy's departure.
Gildan has said it replaced Chamandy because he didn't have a credible long-term strategy for the company, and had lost the board's confidence in his ability to grow the organization.
The company provided fresh details in Tuesday's release, after accessing the former CEO's files and electronic information following his departure.
"In addition to rarely being in the office, holding few senior management meetings and never bothering to visit the Company’s newest manufacturing plant, Gildan has now learned that Mr. Chamandy sent on average no more than a handful of work emails a day and had few business-related meetings diarized on his calendar," the company said.
Gildan said that on Nov. 25, Chamandy sent the board a letter with an ultimatum to approve his "risky multibillion-dollar acquisition strategy" and succession plan. But the next day, before the board had responded, Chamandy began moving out of his office.
The company in its release also denied a recent claim by Browning West that the board intends to use "extreme delay tactics" by postponing its next annual meeting to as late as the fall of 2024.
-- With files from Tara Deschamps
This report by The Canadian Press was first published Jan. 16, 2024.
Companies in this story: (TSX:GIL)
Rosa Saba, The Canadian Press
