A hedge fund intent on buying retailer Christopher & Banks Corp. fired off an incendiary letter Wednesday urging the board to submit to its $64 million offer.
Aria Partners' Edward Latessa culled from various cultural references, including the Broadway play "The Producers" and TV reality show "Project Runway," to hammer home his point. "We are simply trying to protect shareholders from the company's current board of directors," he said in the letter.
The hedge fund, which is based in Boston and Los Angeles, last week offered $1.75 a share for the Plymouth-based retailer, a price that represented a 50 percent premium at the time. Aria now owns a 4 percent stake in Christopher & Banks.
Christopher & Banks rejected the offer and said it would continue working on its current turnaround strategy. Its board also adopted a poison pill defense to avert a hostile takeover.
In his letter to Paul Snyder, the nonexecutive chairman of Christopher & Banks' board, Latessa characterized the poison pill as a "Just Say No Defense."
He questioned the compensation paid to Snyder and singled out board member Anne Jones, who was paid "more than $750,000 while lording over an 83 percent drop in the share price," since 2009. "It reminds us of the farcical plot of 'The Producers' where Bialystock and Bloom scheme to get rich by overselling interests in a Broadway flop."
According to securities filings, Jones was paid $768,560 in cash, stock and option awards during the period. However, the options granted to Jones now have no value because the exercise price is far above the current price of Christopher & Banks' shares.
Latessa also questioned whether Snyder, who is retired from the global accounting firm KPMG, is qualified to participate in the retailer's turnaround. "Is the company really taking its fashion direction from an accountant? Has it ever occurred to you that you are out of your element? ... If you were a contestant on Project Runway, you would have been laughed off."
Jones, who has been a member of the board since January 2000, did not return a phone call from the Star Tribune. Snyder, who has been on the board since May 2010, could not be reached for comment.
In a statement, Christopher & Banks said the new strategy "will yield improved sales, margins and cash flow going forward. Therefore, the interests of all stockholders are best served through the continued focus on the current strategy."
The company declined to comment further.
Announced after retail veteran Joel Waller assumed the chief executive's position in February, the strategy involves reducing the number of styles and items offered in the fall collection, reducing the variety of prices for items, improving inventory flow and developing a better marketing strategy that features unique promotions and fewer storewide sales. The company also closed about 100 stores in the past year.
Last year, the company lost $71 million on $414 million in sales.
Latessa also took the board to task for not buying shares since the new turnaround strategy was announced earlier this year. He urged Snyder and the board to "let the market decide who should manage and own this company."
Christopher & Banks shares closed Wednesday at $1.45, up 5 cents.
Staff writer Patrick Kennedy contributed to this report. Janet Moore 612-673-7752