The activist group investor targeting Forzani Group Ltd. said last week it has the support of a large institutional shareholder in its fight to adding two proposed nominees to the Canadian retailers board.
But FGL's largest shareholder, Letko, Brosseau & Associates, said it plans to vote for the current board's nominees. In a letter to shareholders, Forzani Chairman John Forzani also wrote that the activist group offers no alternative strategy and that the proxy battle is disruptive and costly.
Crescendo, which owns 5.1% of Forzanis shares, claims Forzani has been slow to implement change and increase shareholder value. Shareholders will vote on the measure at Forzani's annual general meeting on June 10. Forzani intends to close stores and reduce the number of store banners to nine from 16.
Forzani also responded to a recommendation by proxy advisor RiskMetrics that urged shareholders to vote for six of the eight FGL nominees and one dissident nominee. FGL noted that another proxy advisor, Glass Lewis & Co., recommended shareholders vote for all FGL nominees. Forzani also said RiskMetrics “recognizes the considerable achievements made by the company, the steps taken and the initiatives currently underway.” Also, losing the two FGL nominees that RiskMetrics did not support “could have the unintended consequence of weakening the Board's ties to our franchisees in Quebec who deliver approximately one-third of Forzani's retail sales.”
