In the latest Browning West and Gildan news, following claims and questioning after Gildan named Vince Tyra as its new CEO, Browning West files a lawsuit against Gildan.

According to multiple reports, the long-term shareholder of Gildan Activewear beneficially owns about 5% of Gildan’s outstanding shares, so its concern for shareholder value makes sense. On March 11, it filed a lawsuit with the Superior Court of Quebec – Commercial Division (Quebec Superior Court) against Gildan and its board of directors to ensure the rights of shareholders are preserved in connection with the May 28 annual meeting of shareholders.

“Rather than assume accountability for its value-destructive decisions, we believe that the Board continues to take oppressive actions against shareholders, demonstrating that its priority is self-preservation,” commented Usman Nabi and Peter Lee of Browning West in a press release. “We are concerned that the Board will seek to delay the Annual Meeting that has been set for May 28th. This is why we have filed an application with the Quebec Superior Court to ensure that the Annual Meeting proceeds on the scheduled date without delay or interference and that the rights of all shareholders are protected with respect to the vote. In addition to requesting that the Quebec Superior Court compel Gildan to hold the Annual Meeting as scheduled without employing any delay tactics or gamesmanship, we want to ensure all shareholders have their votes counted and that the Annual Meeting be conducted fairly and legally.”

As part of the lawsuit, Browning West asks that a neutral, independent chair oversee the meeting. Despite Browning West expecting opposition from Gildan, the organization says it will move forward to ensure all shareholders have a chance to replace directors as they see fit. It believes some directors have “destroyed shareholder value” and “failed to give due regard to the views of investors.”

The lawsuit claims Gildan and its board followed a design of “entrenchment, obfuscation, and disparagement of dissenting shareholders” and placed their personal interests before those of the company and its shareholders.

Browning West’s Claims Against Gildan

Browning West says Gildan and the board has put its interests first, including:

  • Leaking corporate documents and confidential information to journalists and sharing the information with a third-party “governance expert” hired by the board, while refusing to share those same documents and information with shareholders;
  • Improperly soliciting proxies before filing a management information circular;
  • Pursuing meritless litigation with the primary purpose of undermining and delaying Browning West and Gildan shareholders from exercising their rights;
  • Launching unwarranted public attacks on Browning West and imposing costs associated with defending meritless litigation in an attempt to deter and silence shareholders from raising their concerns publicly;
  • Signing a “support agreement,” which was not in the best interest of the Company and includes Board representation rights for a shareholder who has a conflict of interest due to a significant ownership stake in one of Gildan’s largest customers;
  • Attempting to justify its decision to terminate Gildan founder Chamandy and name Tyra as chief executive officer with a misleading and evolving set of explanations that directly contradict signed statements in Gildan’s prior annual reports; and
  • Making groundless attacks on Browning West, including false accusations of acting jointly or in concert with other shareholders, and collaborating improperly with Chamandy while he was chief executive officer of Gildan.

Browning West plans to actively communicate directly with as many Gildan shareholders as possible and solicit their support to ensure substantive change will come to Gildan. Accordingly, Browning West has filed and commenced mailing of an information circular.