Power war at Gildan | The Caisse de dépôt chooses its clan

After turning its back on Gildan a few years ago because the Montreal clothing manufacturer was not paying its fair share of taxes, the Caisse de dépôt et placement du Québec intends to once again become a major shareholder in the company.

The Caisse decided to insert itself into the soap opera that has been unfolding at Gildan for five months by revealing on Wednesday its intention to invest 200 million in the company.

A battle for control of the company was sparked in December after founder and longtime CEO Glenn Chamandy was suddenly fired over succession and strategy issues.

Several institutional shareholders quickly expressed their disagreement publicly and demanded the return to office of Glenn Chamandy. The American investment firm Browning West is the shareholder carrying the torch for the dissidents.

Browning West wants to reconstitute the board of directors to put Glenn Chamandy back in charge to replace Vince Tyra, who became CEO last winter. Browning West has submitted its slate of director nominees for voting at the shareholders’ meeting at the end of May.

Gildan management has just given a new twist to the situation by announcing late Wednesday that the company intended to issue $200 million in senior unsecured notes to the Caisse de dépôt as part of a placement private.

Gildan says it wants to use the money collected from the Caisse to finance its common stock buyback program and to repay a portion of its maturing debt.

The closing of the transaction is, however, scheduled for June, after the shareholders’ meeting to be held on May 28, which leaves doubt about the financing operation in the event of a “victory” by Browning West in the vote used to elect administrators.

The announced transaction with the Caisse is conditional on the successful completion of “confirmatory due diligence and other customary closing requirements.”

Called to offer details on the conditions, Gildan management did not wish to comment further. Also questioned by The Pressthe Caisse simply indicated that it would carry out a “usual” due diligence check.

A spokesperson, however, clarified that the Caisse still does not hold any Gildan shares and that it will therefore not be able to vote at the shareholders’ meeting in three weeks.

In announcing the Caisse’s investment on Wednesday, Gildan stressed that it had agreed to maintain “solid” local management and its global headquarters in Quebec for at least seven years, in addition to committing to paying the global minimum tax.

The Caisse’s decision to invest again in Gildan comes two years after Quebec’s largest institutional investor lost patience and sold all its shares in Gildan because the company was not paying its fair share in its eyes. tax.

The Caisse’s decision also comes as Gildan revealed in March that it was in talks with potential buyers and after management indicated in April that the company’s acquisition continued to attract external interest and that the process was continuing. .

“With its renewed board of directors and its new CEO, Gildan has the right business plan and is making clear commitments to maintain its head office in Quebec and to pay the global minimum tax. This is why the CDPQ decided to support the growth of this large Quebec company,” commented the Caisse’s first vice-president and head of Quebec, Kim Thomassin, in a press release.

This investment by the Caisse in Gildan obviously pleases the company’s management. “We consider this to be an important validation of our board, our management team and our continued commitment to creating value for our shareholders,” also indicated in a press release Tim Hodgson, chairman of the board of Gildan.

Reached early in the evening, Browning West declined to comment. It was not immediately possible to obtain the reaction of Montreal asset manager Jarislowsky Fraser, one of Gildan’s largest shareholders, who has also been opposing the change of CEO since December. His decision will weigh heavily in the outcome of the vote on May 28.