Ramius Issues Open Letter to CPI Corp. Stockholders
June 11 2009 - 11:44AM
PR Newswire (US)
Explains Rationale for Upcoming Election Contest NEW YORK, June 11
/PRNewswire/ -- RCG Starboard Advisors, LLC, a subsidiary of Ramius
LLC (collectively, "Ramius"), today announced that it has issued an
open letter to all stockholders of CPI Corp. ("CPI" or the
"Company") (NYSE:CPY) in order to explain its rationale for taking
the actions Ramius has proposed and to specifically highlight
certain facts surrounding the upcoming election contest. In the
letter, Ramius expressed its belief that an election contest could
have been and can still be avoided at the Company's 2009 Annual
Meeting. Ramius further expressed its support for a proposal that
would result in a CPI Board of Directors comprised of one (1)
Knightspoint Partners representative, one (1) Ramius Group
representative, and five (5) independent directors, three (3) of
whom have directly relevant industry experience. The Ramius Group
believes this Board structure would be in the best interest of all
stockholders and would create a more balanced and experienced
Board. Ramius is the largest stockholder of CPI, owning
approximately 23% of the Company's outstanding shares of Common
Stock. Ramius' nominees for election at the Annual Meeting 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. The full text of the
letter follows: June 11, 2009 Dear Fellow CPI Corp. Stockholder:
RCG Starboard Advisors, LLC, a subsidiary of Ramius LLC, together
with its other affiliates (collectively, the "Ramius Group"),
currently owns approximately 23% of the outstanding common stock of
CPI Corp. ("CPY" or "the Company"). We are the Company's largest
stockholder. We have reviewed the Company's revised proxy statement
filed with the Securities and Exchange Commission on June 5, 2009.
We are writing to you at this time to help explain our rationale
for taking the actions we have proposed and to specifically
highlight certain facts surrounding this election contest. The
Ramius Group has been a shareholder of CPY for over five years.
During that time we have made substantial contributions to the
Company through our direct representation on the Board. Although we
have made progress over the years, it became increasingly clear to
us during 2008 that the Board was too concentrated and was
seriously lacking in retail expertise and independent thought. At
first, we attempted to work through the Board and its respective
committees to address these shortcomings. Unfortunately, because of
the undue influence of Knightspoint Partners, this proved
impossible. Therefore, we determined our only option to enhance the
quality and independence of the Board was through an election
contest. To be clear, the Ramius Group believes that an election
contest could have been and can still be avoided at the Company's
2009 Annual Meeting. To that end, we included a settlement proposal
in a cover letter to the Board that accompanied our April 24, 2009
nomination letter (the "Nomination Letter") to initiate a
meaningful dialogue to reach a mutually agreeable outcome that
would create a fair and balanced Board. The settlement proposal
would have resulted in the expansion of the Board from six to seven
directors and the replacement of just one incumbent director,
Michael S. Koeneke. Mr. Koeneke is a member of Knightspoint
Partners, a 3.5% stockholder. David M. Meyer, the Chairman of the
Board, is also a member of Knightspoint Partners, meaning that
direct representatives of Knightspoint Partners currently occupy
two out of a total of six board seats, a ratio well out of
proportion to their share ownership. We are also deeply troubled
that the Board, under Mr. Meyer's leadership, has determined not to
re-nominate Peter A. Feld, the director representative of the
Company's largest stockholder, for election at the 2009 meeting. We
view this as just one more example of the undue influence that
Knightspoint Partners, a 3.5% stockholder, has over the Company. We
assure you that Ramius and our director representative, Mr. Feld,
have been working hard on behalf of all stockholders. We strongly
question whether the Board would have added two independent
directors to the Board in the past seven (7) months if not for our
continued insistence that the Board initiate a process to add new
independent directors with relevant industry experience. Prior to
November 2008, the Board did not have a single member with directly
relevant experience in the retail and consumer products industries.
The key issue up for consideration in this election contest is the
appropriateness of Knightspoint Partners maintaining two direct
representatives on a six-member Board while removing the lone
representative of the largest stockholder rather than replacing one
Knightspoint Partners representative with a highly-qualified
independent director identified by the Ramius Group. The objective
of the Ramius Group is to create a more balanced and experienced
Board. To that end, the Ramius Group is supportive of increasing
the size of the Board to seven (7) members to accommodate the
addition of one of its independent director candidates in place of
an incumbent director, specifically Mr. Koeneke, and the
re-nomination of Mr. Feld as a director representative of the
largest stockholder. This would create a Board comprised of one (1)
Knightspoint Partners representative, one (1) Ramius Group
representative, and five (5) independent directors, three (3) of
whom have directly relevant industry experience. The Ramius Group
believes this Board structure would be in the best interest of all
stockholders. Unfortunately, Mr. Meyer is unwilling to agree to any
compromise that would result in one of the two Knightspoint
Partners representatives leaving the Board. Given the current
composition of the Board and dynamics in the boardroom, we believe
the only alternative for seeking a more balanced and experienced
Board is to nominate directors for election at the upcoming 2009
Annual Meeting. Please understand that contrary to the Company's
accusations, we are not seeking control or additional influence
over the Company. Our goal is to ensure that the Board has the
right balance of directors who have relevant industry experience
and who are independent so as not to represent the interests of any
one stockholder over the interests of other stockholders. We look
forward to your support at the 2009 Annual Meeting. Best Regards,
Mark R. Mitchell Partner Ramius LLC 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. Media Contact: Peter Feld Ramius LLC (212) 201-4878
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, Mr. Feld
holds 5,252 shares of restricted stock awarded under the Company's
Omnibus Incentive Plan that vest in full on February 6, 2010. As of
the date hereof, Mr. Izganics directly owns 500 shares of Common
Stock. 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 of
Ramius LLC, +1-212-201-4878
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