US internet and television home shopping company ValueVision Media has rejected demands from activist shareholder Clinton Group for the resignation of most board members, increasing the likelihood of a proxy battle.
In a filing to the SEC, ValueVision dismisses demands by the hedge fund for the resignation of chief executive officer Keith Stewart, chairman Randy Ronning and most board members, saying they have no legal merit.
‘Following a careful review of these materials, we have determined that neither the demand letter nor the proposals and nominations letter satisfy the applicable requirements set forth in ValueVision’s bylaws,’ ValueVision says in its November 15 letter to Clinton Group. ‘We are happy to discuss with you, and to make our counsel available to discuss with you, the deficiencies described below in greater detail at your convenience.’
Clinton Group owns 5 percent of ValueVision, which sells goods through infomercials on television and the internet. The hedge fund has threatened to ally with Cannell Capital, another hedge fund, which owns a stake of about the same size, in a proxy war to force management change at the retailer.
Clinton Group says it will recommend substitute candidates and backs its demands with a pledge to shareholders that it will invest another $25 mn in the company ‘at a substantial premium’ to the current share price if its demands are met.
In a letter dated October 31, Clinton Group complains that a ‘performance gap has been caused, in our view, by a failure to innovate and differentiate the company from its peers. Stewart and his management team, many of whom we understand work from home, 1,000 miles or more from the company’s headquarters at least two days per week, have in our view abjectly failed to build significant proprietary brands, expand product assortments sufficiently, diversify the program schedule, optimize the product mix and retain key successful vendors.’
