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Gildan Activewear Inc. GIL-T faces growing opposition from institutional investors over the clothing manufacturer’s plan to refresh its board, and one fund manager revealed it added to its holdings of Gildan stock, ahead of a shareholder vote on control of the company.

On Monday, Gildan’s board announced plans to replace seven of 12 directors ahead of the Montreal-based company’s annual meeting on May 28, a move meant to quell a months-long battle triggered by the board’s decision to dismiss co-founder and chief executive Glenn Chamandy in December.

Within hours, fund manager Browning West LP dismissed the changing of the guard as “desperate and defensive.” The Los Angeles-based investor, which owns 5 per cent of Gildan, urged shareholders to elect its slate of eight directors, who plan to bring back Mr. Chamandy.

On Tuesday, long-time Gildan shareholder Turtle Creek Asset Management Inc. said the board’s decision to bring in new directors while continuing to support recently appointed chief executive Vince Tyra is “ludicrous.” Mr. Tyra is a former executive at Fruit of the Loom and joined Gildan in January.

Turtle Creek, which owns 2.6 per cent of Gildan and first invested more than 10 years ago, is also pushing the board to bring back Mr. Chamandy, who turned a small Quebec company into one of the world’s largest T-shirt, sock and underwear makers, with an $8.2-billion market capitalization.

In a statement, the Toronto-based fund manager said: “We can’t fathom why the incoming board members would throw their full support behind Mr. Tyra when his leadership is opposed by so many shareholders, without first engaging with the owners of the company.”

Turtle Creek said that at Gildan’s annual meeting it plans to support Browning West’s director slate. “We have been very clear in our singular desire for the board to reverse its hasty, haphazard and value destructive termination of Glenn Chamandy,” its statement said.

On Tuesday, hedge fund Anson Funds Management LP disclosed it has been adding to its stake in Gildan and now owns more than two million shares, worth approximately $100-million. Anson has acquired most of its holding since Mr. Chamandy departed and also supports Browning West’s bid to bring back the former CEO.

“The board’s self-directed refreshment is an insult to Canada’s corporate governance regime, and an incredibly desperate attempt to protect the ill-fated decision to replace Glenn Chamandy with Vince Tyra as CEO,” said Moez Kassam, Anson’s chief investment officer, in a statement on Tuesday.

Gildan’s board said it held 87 meetings with shareholders over the past five months. On Monday, the board said: “Browning West is attempting to take control of the board and the company without paying a premium.”

Gildan plans to install Tim Hodgson as its new chair on May 1, along with four other directors who have clothing industry and governance expertise. Gildan has also nominated two directors from the Browning West slate.

Mr. Hodgson, former CEO of Goldman Sachs Canada and a Bank of Canada executive, rebuilt the board and executive team at Hydro One Ltd. as chair of the utility following a showdown with the Ontario government, its controlling shareholder. He was also on the board of MEG Energy Corp. when the Calgary-based company dealt with an activist campaign and hostile takeover bid.

On Tuesday, Gildan stock closed at US$35.72 on the New York Stock Exchange. In early April, Browning West and Mr. Chamandy released a strategy for Gildan that included shifting production of high profit-margin fleeces and T-shirts from Honduras to new facilities in Bangladesh. The fund manager and former CEO predicted the moves would boost Gildan’s stock price to US$60 by the end of 2025 and to US$100 within five years.

In mid-April, Mr. Tyra released a business plan for the manufacturer that focused on expanding sales outside North America and strengthen the company’s three main brands – Gildan, Comfort Colors and American Apparel – by emphasizing their comfort and quality, in addition to competing on price.

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