Ramius Files Preliminary Proxy Materials to Elect Two Director Candidates to the CPI Corp. Board of Directors At the 2009 Annual
27 May 2009 - 10:00PM
PR Newswire (US)
Sends Letter to Chairman David Meyer Expressing Disappointment with
Board's Decision Not to Re-Nominate Peter A. Feld, a Ramius
Representative and Current Director NEW YORK, May 27 /PRNewswire/
-- RCG Starboard Advisors, LLC, an affiliate of Ramius LLC
(collectively, "Ramius"), today announced that it filed on Friday,
May 22, 2009 preliminary proxy materials with the SEC in connection
with its nomination of two director candidates for election to the
Board of Directors of CPI Corp. ("CPI" or the "Company") (NYSE:CPY)
at the Company's 2009 Annual Meeting of Stockholders (the "Annual
Meeting"), which is scheduled to be held on Wednesday, July 8,
2009. Ramius is the largest shareholder of CPI, owning
approximately 23% of the Company's outstanding shares of Common
Stock. Ramius' nominees include Peter A. Feld, a Ramius
representative and an existing Director of CPI, and Joseph
Izganics, a new independent director nominee with extensive
experience in the retail industry. Ramius also announced today that
it sent a letter to the Chairman of the Board of CPI, David Meyer,
expressing its disappointment with the Board's decision not to
re-nominate Peter A. Feld for election at the Annual Meeting and
addressing mischaracterizations contained in the Company's
preliminary proxy statement. The full text of the letter follows:
May 27, 2009 Mr. David M. Meyer Chairman of the Board CPI Corp.
1706 Washington Avenue St. Louis, MO 63103 Dear David: We are
writing to express our disappointment that under your direction,
the Board of Directors has determined not to re-nominate me, a
representative of Ramius, as a director for election at the 2009
Annual Meeting of Stockholders of CPI Corp. ("CPI" or the
"Company). As you know, RCG Starboard Advisors, LLC, a subsidiary
of Ramius LLC (together with its affiliates, "Ramius" or the
"Ramius Group") currently owns approximately 23% of the outstanding
common stock of CPI, making us the largest stockholder of the
Company. We have been a stockholder for over five years and have
demonstrated a long-term commitment to the Company. We feel the
Board's action not to re-nominate a representative of the Company's
largest stockholder only serves to further disenfranchise
stockholders and demonstrates our contention that changes are
needed to the composition of the Board to ensure that the Company
is being run in the best interests of all stockholders. Further, we
would also like to address specific mischaracterizations that we
believe the Company has made in its recent preliminary proxy
statement filed with the Securities and Exchange Commission on May
20, 2009. The Company makes the assertion in its preliminary proxy
statement that Ramius is seeking "additional influence to control
the timing of an eventual sale of the Company." As you well know,
we are not proposing any new candidates to the Board that are
directly affiliated with Ramius. Instead, we have proposed highly
qualified and truly independent directors with extensive experience
in the retail and consumer products industry in order to improve
the quality, independence, and productivity of the Board. These
candidates were identified by a third-party search firm and have
absolutely no prior connection to Ramius or its affiliates. Any
statement to the contrary is completely baseless. Frankly, we find
it disingenuous that you would accuse Ramius of trying to assert
"additional influence" on the Board of CPI. Between you and Michael
S. Koeneke, both members of Knightspoint Partners, you hold two out
of six current Board seats, including the Chairmanship, or 33 1/3%
of the Board. Yet in total, Knightspoint owns just 102,321 shares
it directly purchased, representing 1.5% of the shares outstanding.
The remaining 142,383 shares(1) you and Mr. Koeneke control were
granted to you by the Board as compensation. In the past two years,
the Board has enriched you and Mr. Koeneke with compensation
totaling over $2.2 million(2). This compares to the negative 85%
stock price performance of CPI over the past two years since May
22, 2009. The changes to the Board we are pushing for do not give
any constituent, including Ramius, more influence. The changes will
create a balanced Board composed of truly independent directors
with relevant industry expertise as well as shareholder
representation that is not disproportionate with respect to
ownership. We also take issue with the allegation in the Company's
preliminary proxy statement that Ramius has "pressed the Board for
a sale of the Company despite the current difficult environment..."
We believe this allegation is again highly misleading. During the
period between September 2008 and February 2009, the Company came
precariously close to breaching a bank covenant that required
minimum EBITDA of $50 million. A covenant breach could have
triggered a mandatory repayment of all outstanding debt at a time
when the credit markets were effectively shutdown and refinancing
would have been costly and difficult. Therefore, I felt it prudent
for the Board of CPI (or any Board faced with a similar financing
issue) to evaluate any and all strategic and financial options in
order to ensure stockholder value would be preserved and enhanced
as well as to be prepared in case the Company's lenders were
unreasonable. To characterize my actions in any other manner is
frankly disingenuous and merely serves to inappropriately distract
stockholders from the significant governance issues that we have
highlighted. Finally, in reference to the 10b-5 trading plan that
Ramius filed with the Securities and Exchange Commission on January
23, 2009, the implication in the Company's preliminary proxy
statement that this somehow demonstrates our interest in "gaining
liquidity for its investment" is, once again, false and misleading.
In fact, the purpose of the plan is merely to allow Ramius to
rebalance its portfolios, and the shares subject to the plan
represent but a small minority of our total position. Ramius
continues to own over 1.6 million shares, representing over 23% of
the outstanding shares, and expects to remain the largest
stockholder of the Company for the foreseeable future. This
compares to the 102,321 shares directly purchased by Knightspoint
Partners, representing less than 1.5% of shares outstanding. Any
implication that our interests are somehow not aligned with those
of all stockholders of CPI Corp. is simply false. We are committed
to the long term success of CPI and will continue to fight for the
best interests of all stockholders. Best Regards, Peter A. Feld
Ramius LLC (1) Includes 18,152 restricted shares per Company's 2009
preliminary proxy statement. (2) Per Company's 2008 proxy statement
and 2009 preliminary proxy statement. About Ramius LLC Ramius LLC
is a registered investment advisor that manages assets in a variety
of alternative investment strategies. Ramius LLC is headquartered
in New York with offices located in London, Tokyo, Hong Kong,
Munich, and Vienna. CERTAIN INFORMATION CONCERNING PARTICIPANTS
Ramius Value and Opportunity Master Fund Ltd ("Value and
Opportunity Master Fund"), together with the other participants
named herein, has made a preliminary filing with the Securities and
Exchange Commission ("SEC") of a proxy statement and accompanying
GOLD proxy card to be used to solicit votes for the election of a
slate of director nominees at the 2009 annual meeting of
stockholders of CPI Corp., a Delaware corporation (the "Company").
VALUE AND OPPORTUNITY MASTER FUND ADVISES ALL STOCKHOLDERS OF THE
COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON
THE SEC'S WEB SITE AT http://www.sec.gov/. IN ADDITION, THE
PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE
PROXY STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES
SHOULD BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR. The
participants in this proxy solicitation are Value and Opportunity
Master Fund, Ramius Enterprise Master Fund Ltd ("Enterprise Master
Fund"), Starboard Value & Opportunity Fund, LLC ("Starboard
Value & Opportunity Fund"), Ramius Merger Arbitrage Master Fund
Ltd ("Merger Arbitrage Master Fund"), Ramius Multi-Strategy Master
Fund Ltd ("Multi-Strategy Master Fund"), Ramius Leveraged
Multi-Strategy Master Fund Ltd ("Leveraged Multi-Strategy Master
Fund"), Ramius Advisors, LLC ("Ramius Advisors"), RCG Starboard
Advisors, LLC ("RCG Starboard Advisors"), Ramius LLC ("Ramius"),
C4S & Co., L.L.C. ("C4S"), Peter A. Cohen ("Mr. Cohen"), Morgan
B. Stark ("Mr. Stark"), Thomas W. Strauss ("Mr. Strauss"), Jeffrey
M. Solomon ("Mr. Solomon"), Peter A. Feld ("Mr. Feld") and Joseph
C. Izganics ("Mr. Izganics"). As of the date hereof, Value and
Opportunity Master Fund beneficially owned 797,988 shares of Common
Stock, Starboard Value and Opportunity Fund beneficially owned
212,040 shares of Common Stock, Merger Arbitrage Master Fund
beneficially owned 192,000 shares of Common Stock, Leveraged
Multi-Strategy Master Fund beneficially owned 29,213 shares of
Common Stock, Multi-Strategy Master Fund beneficially owned 179,614
shares of Common Stock and Enterprise Master Fund beneficially
owned 202,054 shares of Common Stock. As of the date hereof, RCG
Starboard Advisors (as the investment manager of Value and
Opportunity Master Fund and the managing member of Starboard Value
and Opportunity Fund) is deemed to be the beneficial owner of the
(i) 797,988 shares of Common Stock owned by Value and Opportunity
Master Fund and (ii) 212,040 shares of Common Stock owned by
Starboard Value and Opportunity Fund. As of the date hereof, Ramius
Advisors (as the investment advisor of Multi-Strategy Master Fund,
Merger Arbitrage Master Fund, Leveraged Multi-Strategy Master Fund
and Enterprise Master Fund) is deemed to be the beneficial owner of
the (i) 179,614 shares of Common Stock owned by Multi-Strategy
Master Fund, (ii) 192,000 shares of Common Stock owned by Merger
Arbitrage Master Fund, (iii) 29,213 shares of Common Stock owned by
Leveraged Multi-Strategy Master Fund, and (iv) 202,054 shares of
Common Stock owned by Enterprise Master Fund. As of the date
hereof, Ramius (as the sole member of each of RCG Starboard
Advisors and Ramius Advisors), C4S (as the managing member of
Ramius) and Messrs. Cohen, Stark, Strauss and Solomon (as the
managing members of C4S) are deemed to be the beneficial owners of
the (i) 797,988 shares of Common Stock owned by Value and
Opportunity Master Fund, (ii) 212,040 shares of Common Stock owned
by Starboard Value and Opportunity Fund, (iii) 179,614 shares of
Common Stock owned by Multi-Strategy Master Fund, (iv) 192,000
shares of Common Stock owned by Merger Arbitrage Master Fund, (v)
29,213 shares of Common Stock owned by Leveraged Multi-Strategy
Master Fund, and (vi) 202,054 shares of Common Stock owned by
Enterprise Master Fund. Messrs. Cohen, Stark, Strauss and Solomon
share voting and dispositive power with respect to the shares of
Common Stock owned by Value and Opportunity Master Fund, Starboard
Value and Opportunity Fund, Multi-Strategy Master Fund, Merger
Arbitrage Master Fund, Leveraged Multi-Strategy Master Fund and
Enterprise Master Fund by virtue of their shared authority to vote
and dispose of such shares of Common Stock. As of the date hereof,
Messrs. Feld and Izganics do not directly own any shares of Common
Stock of the Company. As members of a "group" for the purposes of
Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as
amended, each of the participants in this proxy solicitation is
deemed to beneficially own the shares of Common Stock of the
Company beneficially owned in the aggregate by the other
participants. Each of the participants in this proxy solicitation
disclaims beneficial ownership of such shares of Common Stock
except to the extent of his or its pecuniary interest therein.
DATASOURCE: Ramius LLC CONTACT: Peter Feld, Ramius LLC,
+1-212-201-4878
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