Some DavidsTea Inc. shareholders are pushing back against a turnaround plan and new board of directors proposed by a large shareholder group controlled by its co-founder, Herschel Segal.
A joint letter to the tea chain’s board from Porchlight Equity Management LLC, TDM Asset Management PTY Ltd. and Edgepoint Wealth Management Inc. says they have “serious concerns” with Rainy Day Investments Ltd.’s proposal.
RDI, which says it owns 46 per cent of the chain’s issued and outstanding shares, submitted a slate of director nominees for DavidsTea to consider, including Segal and Lorenzo Salvaggio, another former director.
The shareholder group also says it no longer plans to propose an offer to buy out minority shareholders, but believes its proposed board can turn around the struggling retailer.
The letter says Segal should not be allowed to reconstitute the board with handpicked nominees without consulting the board or other shareholders.
It claims several of Segal’s nominees do not appear to have appropriate qualifications for the job and questions the independence of the proposed slate.
The letter also highlights the scarcity of detail around RDI’s turnaround plan.
“We are not prepared to simply accept RDI’s nominees and believe that there are a sufficient number of other shareholders that would hold similar views,” reads the letter dated March 28.
The group calls on RDI to work with DavidsTea and other significant shareholders to agree on the board nominees, and asks the retailer to communicate their concerns to RDI and offer to start a collaborative process.
“This approach will save (DavidsTea) and all other parties from unnecessary expense and disruption.”
The company’s annual meeting of shareholders will take place on June 14.