Ramius
Value and Opportunity Master Fund Ltd, an affiliate of Ramius LLC (“Ramius”),
together with the other participants named herein, has made a preliminary filing
with the Securities and Exchange Commission ("SEC") of a proxy statement and an
accompanying GOLD proxy card to be used to solicit votes for the election of its
nominees at the 2009 annual meeting of stockholders of CPI Corp., a Delaware
corporation (the “Company”).
On May
27, 2009, Ramius issued the following press release:
RAMIUS
FILES PRELIMINARY PROXY MATERIALS TO ELECT TWO DIRECTOR CANDIDATES TO THE CPI
CORP. BOARD OF DIRECTORS AT THE 2009 ANNUAL MEETING
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
Addresses
Mischaracterizations in the Company’s Preliminary Proxy Statement
NEW YORK, NY – May 27, 2009
–
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 - News) 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.