Crown Crafts directors in board brouhaha
July 23, 2007-- Home Textiles Today,
Gonzales, La. -- Now that it's back on its feet after a restructuring and recapitalization, making money and its stock price climbing, Crown Crafts is facing an untidy and unusually noisy proxy battle with a New York-based investment fund that wants to take control of two seats on the freshly successful company's board.
Wynnefield Partners Small Cap Value Fund, which has owned Crown Crafts stock for about eight years, and which is now the largest shareholder with a 14.6% stake, says it wants to take three of the directors’ chairs coming up for grabs at next month's shareholders meeting -- a move that Crown Crafts opposes.
Up for re-election to the board this year are chairman and ceo E. Randall Chestnut, who led the Crown Crafts turnaround, along with two others board members, William Deyo and Steven Fox. Wynnefield says it has no problem with Chestnut on the board, but wants the seats now held by Deyo and Fox -- and has nominated Wynnefield principal Nelson Obus and his business associate Frederick Wasserman.
The contest heated up when Crown Crafts, staking out the company's position, wooed shareholders with a letter claiming neither of the directors proposed by Wynnefield "is right for Crown Crafts or possesses the necessary qualifications to effectively serve on your board of directors."
Taking off the gloves, Crown went one step further, charging that Obus, along with another Wynnefield employee, “is a named defendant in an ongoing suit brought by the Securities and Exchange Commission in federal court for insider trading."
As if that weren't enough, Crown quoted a further federal filing which said Obus and other defendants "knowingly or recklessly engaged in acts that violated the federal securities law," and "engaged in acts, practices or courses of business that have operated …as a fraud and deceit upon other persons."
Joining the fray with gusto, Wynnefield responded with its own letter to shareholders, charging Crown with an "unjustified, inaccurate and diversionary personal attack against Wynnefield's Nelson Obus."
Getting personal itself, and pumping up the volume, Wynnefield questioned a lack of succession planning at Crown, saying "no individual of Mr. Chestnut's age is immune from health problems or emergency medical procedures."
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