San Diego Approximately a week after receiving an unsolicited offer from KarpReilly Capital Partners LP and H.I.G. Capital LLC to acquire all of its outstanding shares, Charlotte Russe rejected the offer in a letter on Wednesday.
KarpReilly and H.I.G. offered to purchase the company’s outstanding shares for a valuation rate between $9.00 and $9.50 per share in an all-cash, all-equity transaction. KarpReilly also disclosed that it has acquired 1.12 million shares of Charlotte Russe, which, at a 5.4% ownership stake, makes it one of the company's largest shareholders.
According to a letter issued by the retailer’s chairman of the board of directors, Jennifer Salopek, on Wednesday, Charlotte Russe said, “After careful review and in consultation with our legal and financial advisors, our Board unanimously determined that your unsolicited proposal is definitively not in the best interests of Charlotte Russe shareholders.”
The letter went on to describe that Charlotte Russe has been operating under a number of operational, merchandising and inventory-performance constraints and losses. However, since July, interim CEO Len Logil has been working on a restructuring plan and on creating a new operational foundation as the company enters 2009. The plan, according to Charlotte Russe, will focus on brand positioning, merchandising assortment, inventory management, real estate strategy and capital utilization.
On Nov. 12, the company completed its search for a new leadership team, the letter reported.
The Charlotte Russe board felt that the proposal’s timing attempted to “take advantage of current market conditions and this would undermine the long-term shareholder value that the board and management team is committed to building,” Salopek said in the letter.
“We strongly believe that we have the right plan and right people to make Charlotte Russe succeed,” the letter concluded.