Parlux stakeholder reinforces buy-out proposal
the troubled fragrance company, a move that current executive board
members are strongly opposing.
Nussdorf has made no secret that he wants to use his position and experience within the fragrance industry to wield more influence on the company's executive board. He claims this move will help to steer it out of the stormy waters it is currently battling through.
In his most recent open letter aimed at the Parlux board of directors, dated today, Nussdorf said: "Given the current state of affairs at Parlux, your January 11 letter to me appears to be nothing more than public posturing in an effort to influence votes in my solicitation of consents to remove each of you from office and elect a new Board of Directors." Last week the company reported that profits fell 20 per cent to $3.5m against a slight slip in sales of 1 per cent to $39.1m, as lower margins and royalty payments cut into the bottom line.
Nussdorf first publicly hinted at a take-over back in October, when he made an SEC filing stating that he wanted to win over a controlling stake in the company. In connection with that, he has set a date of January 17 for the public solicitation date to gain the consent of current stockholders to remove the current board of directors.
Currently he has a 10.5 per cent stake in the company and is looking to extend it in an effort to also leverage his other related interests in the industry, which include his stakes in family-owned businesses that include on-line fragrance retailer E Com Ventures and Model Reorg - both of which have business connections with Parlux.
Nussdorf's most recent announcement with regards a possible buy-out of the business came last week, in response to a proposal from the Parlux board of directors to authorize the repurchase of up to 10 million shares in the company's common stock - accounting for 55 per cent of the company's outstanding shares.
In his statement, addressed to the board directors, Nussdorf said that he was "understandably concerned that the stock repurchase may be made for the purchase of, and in a manner designed to, entrench the company's current management and board of directors."
He added that any such act would constitute "a breach of fiduciary duty and misuse corporate assets and, in such event, I intend to hold you responsible."
But the mud-slinging has not stopped there. In response the Parlux board of directors sent an open letter to its shareholders today, defending its position and accusing Nussdorf of trying to exploit the situation for his own self-interest.
The letter states: "If successful, Mr. Nussdorf would take control of your company without paying you any control premium for your shares. We believe that his action would significantly jeopardize the value of your investment in Parlux."
The letter goes on to explain that, contrary to Nussdorf's claims, the company has proved to be a strong investment for shareholders, generating approximately 29 per cent and 55 per cent compound annual return to stockholders.
It also states clearly the directors' recommendation not to not to sign the consent cards that shareholders have received from Nussdorf, and due to be balloted tomorrow.
With all parties' cards on the table, it is now down to shareholders to decide the fate of the company, and clearly a decision that will have a profound affect on the future course of Parlux.
