UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED
IN STATEMENTS FILED PURSUANT
TO § 240.13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO
§ 240.13d-2(a)
(Amendment No. )1
Gildan Activewear Inc.
(Name
of Issuer)
Common Shares
(Title of Class of Securities)
375916103
(CUSIP Number)
Usman Nabi
Browning West LP
1999 Avenue of the Stars
Suite 1150
Los Angeles, California 90067
(310) 984-7600
Andrew M. Freedman
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, New York 10019
(212) 451-2300
(Name, Address and Telephone Number of Person
Authorized to Receive Notices
and Communications)
December 29, 2023
(Date of Event Which Requires
Filing of This Statement)
If
the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule
13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following
box ¨.
Note: Schedules
filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See
§ 240.13d-7 for other parties to whom copies are to be sent.
1
The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided
in a prior cover page.
The information required
on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities
Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject
to all other provisions of the Act (however, see the Notes).
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NAME OF REPORTING PERSON |
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Browning West, LP |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
(a) ☐ |
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(b) ☐ |
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SEC USE ONLY |
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SOURCE OF FUNDS |
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) |
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CITIZENSHIP OR PLACE OF ORGANIZATION |
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DELAWARE |
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SOLE VOTING POWER |
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| BENEFICIALLY |
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SHARED VOTING POWER |
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8,640,448 |
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SOLE DISPOSITIVE POWER |
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- 0 - |
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SHARED DISPOSITIVE POWER |
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8,640,448 |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
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8,640,448 |
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
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5.0% |
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TYPE OF REPORTING PERSON |
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PN, IA |
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NAME OF REPORTING PERSON |
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Usman Nabi |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP |
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SEC USE ONLY |
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SOURCE OF FUNDS |
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) |
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CITIZENSHIP OR PLACE OF ORGANIZATION |
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USA |
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SHARED VOTING POWER |
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8,640,448 |
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SOLE DISPOSITIVE POWER |
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SHARED DISPOSITIVE POWER |
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8,640,448 |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
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8,640,448 |
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
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5.0% |
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TYPE OF REPORTING PERSON |
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IN, HC |
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The following constitutes
the Schedule 13D filed by the undersigned (the “Schedule 13D”).
| Item 1. | Security and Issuer. |
This statement relates to
the Common Shares (the “Shares”), of Gildan Activewear Inc., a Canadian corporation (the “Issuer”). The address
of the principal executive offices of the Issuer is 600 de Maisonneuve Boulevard West, 33rd Floor, Montreal, Quebec, Canada
H3A 3J2.
| Item 2. | Identity and Background. |
(a) This
statement is filed by:
| (i) | Browning West, LP, a Delaware limited partnership (“Browning West”), with respect to the Shares
held by a certain fund (the "Browning West Fund") to which it serves as investment manager; and |
| (ii) | Usman Nabi, as the managing member of Browning West UPG ManCo LLC (“Browning West UPG”), the
general partner of Browning West, and the Chief Investment Officer of Browning West. |
Each of the foregoing
is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons
is party to that certain Joint Filing Agreement, as further described in Item 6. Accordingly, the Reporting Persons are hereby filing
a joint Schedule 13D.
(b) The
principal business address of each of Browning West and Mr. Nabi is 1999 Avenue of the Stars, Suite 1150, Los Angeles, California 90067.
(c) The
principal business of Browning West is serving as the investment manager of the Browning West Fund. Mr. Nabi serves as the managing member
of Browning West UPG and the Chief Investment Officer of Browning West.
(d) During
the last five years, none of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During
the last five years, none of the Reporting Persons has been a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment, decree of final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
(f) Browning
West is organized under the laws of the State of Delaware. Mr. Nabi is a citizen of the United States of America.
| Item 3. | Source and Amount of Funds or Other Consideration. |
The Shares beneficially owned
by the Reporting Persons were purchased with the working capital of the Browning West Fund for which Browning West serves as investment
manager (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market
purchases. The aggregate purchase price of the 8,640,448 Shares beneficially owned by the Reporting Persons is approximately $233,338,879,
including brokerage commissions.
| Item 4. | Purpose of Transaction. |
The Reporting Persons purchased
the Shares based on their belief that the Shares, when purchased, constituted an attractive investment opportunity. Depending upon overall
market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would
make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer
through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, on such terms
and at such times as the Reporting Persons may deem advisable.
Based on the Reporting Persons’
knowledge of longtime CEO and Co-Founder Glenn Chamandy’s strong historical record and the healthy trajectory of the business, the
Reporting Persons were alarmed to learn that the Board had abruptly terminated Mr. Chamandy as CEO without cause on December 11th
and had appointed Vince Tyra to replace him. Since such time, the Reporting Persons have issued two public letters to the Issuer’s
board of directors (the “Board”) and a public letter to shareholders expressing, among other things, their deep concerns with
the Board’s poor handling of the CEO succession and questionable judgement and outlining three critical deficiencies in the Board’s
CEO search criteria that led to the unacceptable appointment of Mr. Tyra as CEO. In the first public letter issued to the Board on December
14th (the “December 14 Letter”), the Reporting Persons called on the Board to immediately (i) reinstate Mr. Chamandy
to the Board and as CEO; (ii) remove Donald Berg as Chair of the Board and initiate a search for a new Chair; and (iii) appoint Browning
West’s Co-Founder Peter Lee to the Board as a representative of a significant, long-term shareholder. The Reporting Persons also
noted in the December 14 Letter that in the event the Board does not act with urgency, the Reporting Persons will consider exercising
their rights as a shareholder, including with respect to requisitioning a special meeting to reconstitute the Board.
Unfortunately, rather than
address the serious concerns and demands emanating from a critical mass of the Issuer’s longest-tenured shareholders, the Board
has demonstrated its recalcitrance by standing firmly behind its poor, value destructive decision-making and making threats against its
own shareholders.
In a December 20th
public letter to the Board (the “December 20 Letter”), the Reporting Persons reiterated their demands that the Board immediately
(i) reinstate Glenn Chamandy as CEO; (ii) remove Mr. Berg as Chair, and (iii) appoint Browning West’s Co-Founder Peter Lee as a
shareholder representative to the Board. In the December 20 Letter, the Reporting Persons warned the Board members that should they continue
to ignore the feedback of eight shareholders who collectively own more than 33% of shareholders, the Reporting Persons are fully prepared
to requisition a Special Meeting of shareholders to hold the Board accountable for its actions and prevent the further destruction of
value.
After the Board continued
to ignore the urgings of the Reporting Persons and demonstrated its unwillingness to effectively remedy the broad and unprecedented shareholder
opposition to its recent actions, the Reporting Persons issued a letter to shareholders on December 29th (the “December
29 Letter”) conveying the Reporting Persons’ intention to requisition the Issuer to convene a Special Meeting, where shareholders
could vote to remove five of the incumbent directors from the Board; and appoint five highly qualified director candidates – Michael
Kneeland, Glenn Chamandy, Peter Lee, Karen Stuckey, and J.P. Towner – to the Board.
The Reporting Persons stated
in the December 29 Letter that the Special Meeting will represent a referendum on the Board’s actions and, if successful, the newly
reconstituted Board will have a mandate to immediately take the following actions: (i) appoint Mr. Kneeland as independent, non-executive
Chair, (ii) terminate Mr. Tyra’s employment, and (iii) appoint Mr. Chamandy as CEO.
The five highly qualified
director candidates are:
| · | Michael Kneeland (U.S. Citizen), Non-Executive Chair and Former Chief Executive Officer of United Rentals,
Inc. (NYSE: URI), is a renowned leader with an exceptional record of value creation in a large and operationally complex business, with
experience overseeing a robust executive development program and successful CEO succession processes, and experience working with founders
of highly successful businesses. In our experience, the most effective board Chairs are those individuals who have been successful CEOs
in their own executive careers. Former CEOs are able to more effectively mentor current CEOs and their successors, as opposed to those
executives whose careers ended in a functional or divisional role. His experience is highly relevant given the recently mishandled CEO
succession, which was overseen by the current Board. |
| o | Exceptional Record of Value Creation in a Large and Operationally Complex Business: Mr. Kneeland
currently serves as the Non-Executive Chair of United Rentals, Inc. (“United Rentals”), a nearly $50 billion USD enterprise
value equipment rental business with over $14 billion USD of revenue and nearly $7 billion USD of EBITDA. Mr. Kneeland became Chair in
May 2019, following his retirement as CEO. United Rentals stock has returned 16x or nearly 18% annualized over the past 16 years, generating
$34 billion USD in value spanning Mr. Kneeland’s CEO and Chair tenure at United Rentals from 2007 to today. Under Mr. Kneeland’s
leadership as CEO, United Rentals also invested over $10 billion USD in net capital expenditures and nearly $8 billion USD in acquisitions
which drove significant value creation. United Rentals’ revenue, EBITDA, and free cash flow per share grew 2.5x, 3.8x, and 9.5x,
respectively, during his CEO tenure. During his tenure as CEO and Chair, United Rentals’ operating margins improved over 1,000 basis
points to over 28%, which is well above the 18 to 20% operating margins shareholders expect from Gildan. Mr. Kneeland’s leadership
achievements are profiled in the book “Lessons from the Titans,” which highlights his team’s operational excellence,
kaizen mentality, and investment discipline. These skills are directly relevant to Gildan’s operations. |
| o | Experience Leading Successful CEO Succession Processes: When he was CEO, Mr. Kneeland carefully
developed internal succession candidates, and in 2019 he successfully transitioned the United Rentals CEO role to COO Matthew Flannery.
Since Mr. Flannery became CEO, United Rentals’ stock has returned 4.1x, or 35% annualized, continuing the company’s strong
track record of value creation. |
| o | Experience Working with Founders of Successful Businesses: United Rentals was initially led by
its founders in the first six years of the company’s existence. Mr. Kneeland had extensive experience working with these founders,
who remained on United Rentals’ board of directors while Mr. Kneeland was in a senior leadership position. |
| o | Notable Leadership Roles: Mr. Kneeland currently serves as Chair of Maxim Crane Works LP and as
a director on the board of directors of American Tire Distributors, Inc. In 2015, he was appointed to the National Advisory Board for
the Johns Hopkins Berman Institute of Bioethics. |
| · | Glenn Chamandy (Canadian Citizen), Co-Founder and Former Chief Executive Officer of Gildan, has a strong
record of value creation, an unrivaled understanding of the Issuer’s low-cost vertically integrated apparel manufacturing business
model, and experience leading a complex global business. His experience is highly relevant given his role as the CEO of the Issuer for
almost 20 years. |
| o | Strong Record of Value Creation: Mr. Chamandy has over 40 years of experience leading Gildan, with
almost 20 years of experience serving as CEO. From 1998 to 2023, Mr. Chamandy was responsible for delivering nearly 16% annual growth
in earnings-per-share. During this time, Gildan’s stock returned 99x, or a nearly 20% annualized return, outperforming all of Gildan’s
competitors, many of which were forced to exit Gildan’s market or were acquired by Gildan. Even through a challenging economic environment,
Mr. Chamandy enhanced market share and grew EPS at Gildan by 54% in the past four years. |
| o | Unrivaled Understanding of Gildan’s Low-Cost Vertically Integrated Apparel Manufacturing Business
Model: Mr. Chamandy devoted his entire career to building Gildan into a low-cost, vertically integrated manufacturing business, investing
over $2 billion USD of capital expenditures over the past 20 years. Much of Gildan’s success can be attributed to the low-cost position,
which Mr. Chamandy architected and maintained for decades. |
| o | Experience Leading a Complex Global Business: Mr. Chamandy oversaw Gildan’s growth to over
$3 billion USD of annual sales and over $700 million USD of EBITDA. He led the expansion of Gildan’s operations into Central America
and Bangladesh. |
| o | Notable Leadership Roles: In 2015, Mr. Chamandy founded The Chamandy Foundation, a private family
foundation with a vision of improving the lives of the younger generation, through funding areas such as health and wellness, education,
poverty, research, and the environment. |
| · | Peter Lee (U.S. Citizen), Co-Founder and Partner of Browning West, possesses extensive financial and
capital allocation acumen, experience leading public company CEO searches, and brings substantial alignment with shareholders given that
Browning West is one of the Issuer’s largest long-term shareholders. His experience is highly relevant given the current Board has
recently taken actions that have destroyed substantial value for shareholders. |
| o | Extensive Financial and Capital Allocation Acumen and Prior Public Company Board Experience: Mr.
Lee is a Partner and Co-Founder of Browning West, where he plays a leading role in investment research and capital allocation. Mr. Lee
previously served on the board of Countryside Partnerships plc (“Countryside”), and he played a leading role in enabling the
merger of Countryside and Vistry Group plc to create the largest homebuilder by volume in the U.K. Prior to joining Browning West, Mr.
Lee worked at Criterion Capital Management, Grey Mountain Partners, and Lazard. |
| o | Experience Leading Public Company CEO Searches: The Partners of Browning West have co-led seven
CEO or Chair searches at public companies, including co-leading a CEO search to resolve a weak succession plan at Countryside Properties
plc, where Mr. Lee served as a director. If appointed to Gildan’s Board, Mr. Lee would harness all of Browning West’s resources
to assist Gildan with succession planning and other matters. |
| o | Strong Alignment with Shareholders: If elected to the Board, Mr. Lee would bring a shareholder
perspective and strong alignment to the boardroom, considering Browning West is one of Gildan’s top long-term shareholders. Mr.
Lee has been deeply involved in the firm’s investment in Gildan, having conducted 46 meetings with senior leadership and multiple
visits to the Company’s manufacturing sites. |
| · | Karen Stuckey (U.S. Citizen), Former Senior Vice President at Walmart Inc. (NYSE: WMT), has extensive
experience in apparel, led large-scale businesses with an international presence, and operated within a low-cost business model. Her experience
is highly relevant given the Issuer’s low-cost business model and the fact that no current Gildan directors have mass market apparel
experience. |
| o | Extensive Expertise in Apparel, Including Private Label: Ms. Stuckey has nearly two decades of
experience as a senior leader at Walmart Inc. (“Walmart”), most recently as Senior Vice President, Private Brand within the
General Merchandise segment. In this role, Ms. Stuckey led the development of Walmart’s private label strategy across more than
100 verticals, including apparel. It is noteworthy that she was responsible for introducing Gildan private label products at Walmart.
Ms. Stuckey also served as President of the Casualwear Division of Hanesbrands Inc. (NYSE: HBI) from 2000 to 2004, which was a competitor
to Gildan at the time. These experiences are highly relevant as she can provide both a competitor’s and customer’s perspective
on Gildan and would be the first member of the Board with direct mass market apparel product knowledge. |
| o | Experience Operating Businesses of Significant Scale: Ms. Stuckey oversaw a segment with over $40
billion USD in annual revenues with full P&L responsibility and led the development of strategy and operational execution. Walmart
operates more than 10,500 retail stores across 24 countries and is the world’s largest private employer. |
| o | Experience Operating Internationally with a Global Supply Chain: Ms. Stuckey oversaw global operations
with a sourcing budget of over $20 billion USD and a supply chain across multiple continents. Ms. Stuckey has direct experience working
in countries in which Gildan operates throughout Central America and Asia. |
| o | Operated Within a Low-Cost Business Model: During a nearly two-decade career at Walmart, Ms. Stuckey
was steeped in a culture and operating model that emphasized the importance of low-cost operations. The success of Walmart’s low-cost
model is widely considered one of the great case studies in long-term value creation. |
| · | J.P. Towner (Canadian Citizen), Former Chief Financial Officer of Dollarama Inc. (TSX: DOL) and Current
Chief Financial Officer of RONA inc., has extensive experience working in low-cost vertically integrated businesses focused on value-oriented
consumer products with successful founders and has a track record of delivering strong financial results. His experience is highly relevant
given Gildan’s focus on vertical integration and maintaining a low-cost advantage. |
| o | Experience in Vertically Integrated Businesses Focused on Value-Oriented Consumer Products: Mr.
Towner is the former Chief Financial Officer of Dollarama Inc. (“Dollarama”), a $23 billion USD enterprise value vertically
integrated retailer focused on value-oriented products based in Canada. Dollarama is vertically integrated through sourcing, distribution,
and retail and focuses on delivering the best value to its customers in Canada, which is highly relevant to Gildan’s own vertically
integrated and low-cost business model. In addition to its Canadian operations, Dollarama also operates a highly successful multi-national
strategy across four countries in Central and South America. During Mr. Towner’s tenure, Dollarama’s revenue grew at nearly
14% annually and earnings per share grew at nearly 25% annually. These strong operating results underpinned a total return of 84% and
an annualized return of 27% for Dollarama’s stock during Mr. Towner’s tenure. |
| o | Track Record of Delivering Strong Financial Results: Mr. Towner is a seasoned finance executive
with more than 15 years of experience in corporate and financial strategy, capital markets, and risk management. As Chief Financial Officer
of Dollarama, Mr. Towner contributed to a highly successful capital allocation strategy and returned significant value to shareholders;
in addition he was instrumental in improving Dollarama’s EBITDA margins. He currently serves as the Chief Financial Officer of RONA
inc. (“RONA”), one of Canada's leading home improvement retailers, currently owned by a private equity firm. RONA generated
over $5 billion USD in revenue in 2022, operating or servicing 425 corporate and affiliated dealer stores with a team of 22,000 employees.
Mr. Towner also spent five years as Executive Vice-President and Chief Financial Officer of Pomerleau Inc. (“Pomerleau”),
one of the largest construction companies in Canada, which generated nearly $2.4 billion USD in revenue in 2021. During his tenure, he
contributed to increasing the revenue and profitability of Pomerleau’s operations by 3x and 5x, respectively. Additionally, Mr.
Towner spent nearly 10 years with BMO Capital Markets. |
| o | Experience Working with Founders of Highly Successful Businesses: Mr. Towner has worked extensively
with independent board members and board committees of public and private companies, as well as representatives from the founding families
of Dollarama and Pomerleau. |
A copy of each of the December
14 Letter, December 20 Letter and December 29 Letter, is attached hereto as an exhibit and incorporated herein by reference.
The Reporting Persons have
carefully and meticulously compiled a slate of five highly qualified director candidates to replace the incumbent Board. The five director
candidates have strong track records of value creation, relevant industry and corporate governance experience, as well as proven management
and board service pedigrees.
No Reporting Person has any
present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule
13D except as set forth herein or such as would occur upon or in connection with completion of, or following, any of the actions discussed
herein. The Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors including,
without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities
markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their
investment in the Issuer as they deem appropriate including, without limitation, engaging in additional communications with management
and the Board of the Issuer, engaging in discussions with shareholders of the Issuer and others about the Issuer and the Reporting Persons’
investment, making proposals to the Issuer concerning changes to the capital allocation strategy, capitalization, ownership structure,
Board structure (including Board composition) or operations of the Issuer, purchasing additional Shares, selling some or all of their
Shares, engaging in short selling of or any hedging or similar transaction with respect to the Shares, or changing their intention with
respect to any and all matters referred to in Item 4.
| Item 5. | Interest in Securities of the Issuer. |
The aggregate percentage
of Shares reported owned by each person named herein is based upon 172,199,799 Shares outstanding as of October 31, 2023, which is the
total number of Shares outstanding as reported in Exhibit 99.1 to the Issuer’s Form 6-K filed with the Securities and Exchange Commission
on November 2, 2023.
| (a) | Browning West, as the investment manager to the Browning West Fund, may be deemed to beneficially own
the 8,640,448 Shares held by the Browning West Fund. |
Percentage: Approximately
5.0%
| (b) | 1. Sole power to vote or direct vote: 0
2. Shared power to vote or direct vote: 8,640,448
3. Sole power to dispose or direct the disposition: 0
4. Shared power to dispose or direct the disposition: 8,640,448 |
| (c) | The transactions in the Shares by Browning West on behalf of the Browning West Fund during the past 60
days are set forth in Schedule A and are incorporated herein by reference. |
| (a) | As the managing member of Browning West UPG and Chief Investment Officer of Browning West, Mr. Nabi may
be deemed to beneficially own the 8,640,448 Shares beneficially owned by Browning West. |
Percentage: Approximately
5.0%
| (b) | 1. Sole power to vote or direct vote: 0
2. Shared power to vote or direct vote: 8,640,448
3. Sole power to dispose or direct the disposition: 0
4. Shared power to dispose or direct the disposition: 8,640,448 |
| (c) | Mr. Nabi has not entered into any transactions in the Shares during the past 60 days. The transactions
in the Shares by Browning West on behalf of the Browning West Fund during the past 60 days are set forth in Schedule A and are incorporated
herein by reference. |
The filing of this Schedule
13D shall not be deemed an admission that the Reporting Persons are, for purposes of Section 13(d) of the Securities Exchange Act of 1934,
as amended, the beneficial owners of any securities of the Issuer that he or it does not directly own. Each of the Reporting Persons specifically
disclaims beneficial ownership of the securities reported herein that he or it does not directly own.
| (d) | No person other than the Reporting Persons is known to have the right to receive, or the power to direct
the receipt of dividends from, or proceeds from the sale of, the Shares. |
| Item 6. | Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. |
On January 8, 2024, the
Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf of each of
them of statements on Schedule 13D with respect to the securities of the Issuer to the extent required by applicable law. The Joint Filing
Agreement is attached hereto as Exhibit 99.4 and is incorporated herein by reference.
Other than as described herein,
there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and
any other person, with respect to the securities of the Issuer.
| Item 7. | Material to be Filed as Exhibits. |
| 99.4 | Joint Filing Agreement, dated January 8, 2024. |
SIGNATURES
After reasonable inquiry
and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete
and correct.
Dated: January 8, 2024
| |
Browning West, LP |
| |
|
| |
By: |
/s/ Samuel Green |
| |
|
Name: |
Samuel Green |
| |
|
Title: |
Chief Compliance Officer and Chief Financial Officer |
| |
/s/ Usman Nabi |
| |
Usman Nabi |
SCHEDULE A
Transactions in Securities of the Issuer
During the Past 60 Days
| Nature of the Transaction |
Securities
Purchased/(Sold) |
Price Per
Security($) |
Date of
Purchase/Sale |
Browning West, LP
(On Behalf of the Browning West Fund)
| Purchase of Common Shares |
75,000 |
34.4822 |
12/15/2023 |
| Purchase of Common Shares |
350,000 |
33.9295 |
12/18/2023 |
| Purchase of Common Shares |
1,162,900 |
34.7651 |
12/19/2023 |
| Purchase of Common Shares |
200,000 |
33.1561 |
12/28/2023 |
| Purchase of Common Shares |
207,000 |
33.3455 |
12/29/2023 |
Exhibit 99.1
Browning West Issues Letter to Gildan Activewear’s
Board of Directors Outlining Steps to Restore Stakeholder Confidence
Believes the Board’s Poor Handling
of CEO Succession and Questionable Judgement Have Put Gildan’s Business and Shareholders at Great Risk
Outlines Critical Deficiencies in the
Board’s CEO Search Criteria, Resulting in the Appointment of an Individual Lacking a Track Record of Value Creation and Critical
Manufacturing and Vertical Integration Experience
Calls on the Company to Reinstate Glenn
Chamandy as CEO, Remove Donald Berg as Chair and Appoint a Shareholder Representative to the Board to Prevent Permanent Damage at Gildan
Will Evaluate Its Right as a Shareholder
to Reconstitute the Board by Requisitioning a Special Meeting if Gildan Fails to Correct Its Significant Missteps and Restore Stability
to the Company
December 14, 2023 04:00 PM Eastern Standard Time
LOS ANGELES--(BUSINESS WIRE)--Browning
West, LP ("Browning West" or “we”), which beneficially owns approximately 3.9% of the outstanding shares of Gildan
Activewear Inc. (NYSE: GIL) (TSX: GIL), today issued the following letter to the Company’s Board of Directors.
***
December 14, 2023
Gildan Activewear Inc.
600 Maisonneuve Blvd W #3300
Montreal, QC H3A 3J2
Attn: The Board of Directors
Subject: Restoring Stakeholder Confidence and Preventing
Permanent Damage at Gildan
Members of the Board of Directors (the “Board”),
Browning West, LP (together with its affiliates, “Browning
West” or “we”) owns approximately 3.9% of Gildan Activewear Inc.’s (“Gildan” or the “Company”)
outstanding common shares, making us one of the Company’s largest shareholders. We are a long-term shareholder of Gildan and we
have continually increased our investment over the past several years while never selling a share of the Company. Our confidence in Gildan’s
business and long-term potential stems from our in-depth and multifaceted analysis, including 46 total meetings with senior leadership,
13 on-site visits, and multiple trips to the Company’s manufacturing plants in Honduras and North Carolina.
Through the course of our research, we found that Gildan’s
long-time CEO and Co-Founder, Glenn Chamandy, is a strong leader who has played an instrumental role in the Company’s impressive
success. Mr. Chamandy has built Gildan into a dominant business with a strong culture and a wide competitive moat, derived primarily from
low-cost manufacturing and vertically integrated operations. Under Mr. Chamandy’s leadership, Gildan’s stock has generated
a 99x total return for shareholders and the Company’s earnings per share have grown by nearly 16% annually over 25 years.1
We believe there are few leaders with Mr. Chamandy’s track record of value creation. Despite a challenging macroeconomic environment
over the past four years, Mr. Chamandy delivered strong operational performance and large market share gains resulting in 54% growth in
earnings per share.2 These share gains position the Company well for further earnings growth in a more normalized economic
environment. We believe that under Mr. Chamandy’s leadership, Gildan’s share price was poised to be worth $60 to $80 USD
over the next two years, which represents an approximately 80% to 140% increase from the current price, which assumes that Mr. Chamandy
delivers $4 of earnings per share and the stock re-rates to its historical valuation range.3
Based on our knowledge of Mr. Chamandy’s strong historical
record and the healthy trajectory of the business, we were alarmed that the Board abruptly terminated Mr. Chamandy as CEO – without
cause or a viable explanation – on December 11th. The Board’s poor handling of succession and questionable judgement
when it comes to its most important responsibility and decision have put Gildan’s business and shareholders at great risk. As
described in subsequent sections of this letter, the Board’s CEO search criteria and process were flawed from the outset, resulting
in the appointment of a new CEO with limited manufacturing experience and a record of value destruction. We are also concerned that the
Board’s poorly overseen leadership transition may trigger attrition among Gildan’s other senior executives, which increases
the risk of execution missteps given that Gildan’s business requires intense operational oversight. Finally, while there is never
a good time to replace an engaged and value-creating CEO with one who has a history of value destruction, it is even more of a head-scratching
decision to do so in a challenging economic environment, which has adversely impacted the industry in recent quarters.
The purpose of this letter is to detail our strong objection
to the Board’s recent decisions and to propose tangible actions to restore stakeholder confidence and put Gildan on stronger footing.
It is imperative that the Board acts in the best interests of the Company and its stakeholders and moves immediately to implement our
recommended actions before permanent damage is done.
***
I. Critical Deficiencies in the Board’s CEO Search
Criteria Resulted in a Poor CEO Appointment
We believe there were three critical deficiencies in the Board’s
CEO search criteria, which resulted in an unacceptable CEO appointment and a significant downgrade from Mr. Chamandy’s leadership.
The Board’s search criteria should have prioritized candidates with: (i) best-in-class manufacturing and vertical integration experience,
(ii) a clear and verifiable track record of value creation, and (iii) a demonstrated ability to manage an increasingly global business
with vast scale.
The Board’s CEO appointee, Vincent Tyra, is lacking with respect
to each of these three critical criteria and therefore threatens Gildan’s near- and long-term prospects.
| i. | The Board’s CEO search criteria was flawed from the outset as it lacked a focus on best-in-class manufacturing and vertical
integration experience, which is apparent in Mr. Tyra’s appointment. Through our substantial time spent understanding Gildan’s
business and visiting facilities, we have come to appreciate that the Company’s remarkable long-term returns were primarily derived
from unrivaled manufacturing excellence and vertical integration, which drove Gildan’s low-cost advantage and resulted in substantial
market share gains. It should be obvious that Gildan’s next CEO would need experience running best-in-class manufacturing operations
with a high degree of vertical integration and that this should have been a central tenet of the Board’s CEO search criteria.
However, in recent discussions with Gildan’s Chair, Donald Berg, we were perplexed to learn that the Board found Mr. Tyra to be
a suitable fit due to non-rigorous, subjective qualities such as entrepreneurial spirit, passion, and competitiveness. Mr. Berg
made no mention of best-in-class manufacturing or vertical integration experience as criteria for the CEO search and Mr. Tyra’s
selection during our conversations.
After studying Mr. Tyra’s background, it became clear that none of his prior executive roles involved complex global manufacturing
operations comparable to those of Gildan. Mr. Tyra’s longest-tenured CEO role appears to be as the leader of Broder Brothers,
an apparel distributor. Our research suggests that Broder Brothers primarily focused on managing warehouses and inventory. Mr. Tyra also
served as CEO of ISCO Industries, which appears to be primarily a distribution and fabrication business. Earlier in his career, Mr. Tyra
appears to have held the divisional role of “President of Retail and Activewear” at Fruit of the Loom. As a marketing-centric
company, Fruit of the Loom operates high-cost manufacturing facilities with little vertical integration. Furthermore, Fruit of the Loom
has struggled for decades and lost tremendous market share to Gildan under Mr. Chamandy’s leadership. |
| ii. | The Board’s CEO search criteria does not emphasize a clear and verifiable record of value creation; It is alarming that
Mr. Tyra has a track record of significant value destruction. The Partners of Browning West have co-led seven leadership searches
at public companies, and in each case we have insisted on search criteria that includes a clear and verifiable record of value creation
in order to minimize risk for stakeholders. It is disappointing that the Board appears to have omitted this critical criteria in its CEO
search process. Mr. Tyra has destroyed substantial shareholder value in past executive roles at Fruit of the Loom and Broder Brothers,
as well as in his past Chair role at Industrial Services of America. We are alarmed at Mr. Tyra’s appointment and worry that Gildan’s
shareholders may suffer similar value destruction under his leadership.
|
The Board has stated that “Vince was President of
Fruit of the Loom, where he led a turnaround of the company culminating in its sale to Berkshire Hathaway.” However, an investigation
of the facts paints a very different picture. Mr. Tyra appears to have held the divisional role of “President of Retail and Activewear”
per his LinkedIn profile and not “President of Fruit of the Loom” as Gildan’s press release suggested. We question why
the Board and/or Mr. Tyra appear to mischaracterize Mr. Tyra’s seniority at Fruit of the Loom. During Mr. Tyra’s tenure
as President of Retail and Activewear at Fruit of the Loom from 1997 to 2000, its share price declined by 99%, Activewear segment
sales fell by 26%, and Activewear operating profit swung from $75 million USD to a loss of over $30 million USD.4 Activewear
operating margins also averaged 4% during this period, well below the 18% to 20% operating margins shareholders expect from Gildan.5
In 1999, Fruit of the Loom filed for Chapter 11 bankruptcy. Berkshire Hathaway eventually acquired the business during the bankruptcy
process in 2002, two years after Mr. Tyra left his role. While Mr. Tyra was at Fruit of the Loom, Gildan’s net earnings grew by
4x, and its stock, following its IPO in June 1998, increased nearly 5x under Mr. Chamandy’s leadership.6
During Mr. Tyra’s tenure as CEO of Broder Brothers from 2000 to 2005, the business’s net income declined from $7.3
million USD to a loss of $2.9 million USD.7 Broder Brothers’ operating margin averaged 2% during Mr. Tyra’s
tenure, well below the 18-20% operating margins shareholders expect from Gildan.8 In the years following Mr. Tyra’s departure,
the Company was forced to restructure to avoid bankruptcy, resulting in Broder Brothers’ existing equity holders experiencing
an estimated 60% loss.9 Over the same period that Mr. Tyra was CEO of Broder Brothers, Gildan’s net earnings doubled
and its stock increased 5x under Mr. Chamandy’s leadership.10
During Mr. Tyra’s tenure on the Board of Industrial Services of America from 2014 to 2019 and as Chair from 2018 to 2019,
revenue declined by 55% and the share price declined by 77%.11 Its operations also suffered as metal commodity prices changed,
which is relevant as Gildan must manage certain commodity exposure.
| iii. | The Board’s CEO search criteria does not emphasize a candidate’s demonstrated ability to manage a large-scale, and
increasingly global organization, and Mr. Tyra’s most recent experience appears to be managing businesses that would be classified
as “microcap” due to their small scale. The Board highlights Mr. Tyra’s most recent experience working with private
equity. Upon further research it appears that many of the companies he was involved in were subscale with EBITDA of less than $15 million
USD.12 We fail to see how this experience operating “microcap” companies qualifies him to run a business of Gildan’s
scale with an enterprise value of nearly $7 billion USD and EBITDA of over $700 million USD. We are also concerned that Mr. Tyra’s
experience with relatively small domestic companies makes him ill-prepared to lead a business with an expanding global reach, including
new operations in Bangladesh. The Board has allocated substantial shareholder capital to the Bangladesh facilities, which are in the process
of scaling up operations next year and will require impeccable execution. Finally, we are concerned to learn that Mr. Tyra does not plan
to move to Gildan’s headquarters and instead will attempt to run Gildan’s vast global operations from Louisville, Kentucky,
where he currently resides despite Gildan having no presence there today.13 |
II. Diverging Visions for Gildan’s CEO Succession
We believe it is important to draw a contrast between our understanding
of the Board and Mr. Chamandy’s diverging visions for succession and Gildan’s future. We have learned that the primary reason
for Mr. Chamandy’s termination was that he wanted to support the Board in carrying out a thoughtful succession plan over the next
few years while remaining CEO. Mr. Chamandy’s more patient approach would have enabled the Company to further develop internal candidates
for the CEO role, with the obvious advantage that such candidates are steeped in the Company’s unique culture and manufacturing
excellence. In our experience, any Board should jump at the opportunity to leverage a CEO of Mr. Chamandy’s caliber in a thorough
search for a successor, considering both internal and external candidates with clearly defined search criteria. We agree that succession
should occur at Gildan, but it must be implemented thoughtfully and with relevant, well-defined criteria.
In contrast to Mr. Chamandy’s thoughtful approach, it appears
that the Board’s vision for succession was to rush forward with a poor CEO appointment (i) based on an arbitrary timeline, (ii)
with flawed CEO search criteria, (iii) without the involvement of Mr. Chamandy, and (iv) in a challenging economic environment. We question
why the Board neglected to utilize Mr. Chamandy’s wisdom, especially given his outstanding multi-decade track record. Had the Board
consulted him, it would likely have learned that manufacturing excellence is a critical skill set for any future CEO. The Board’s
lack of thoughtful succession planning culminated in the abrupt termination of Mr. Chamandy, a disjointed transition plan, and the appointment
of a new CEO who lacks critical best-in-class manufacturing experience and has a clear track record of value destruction. In just
three days since the Board’s rash announcement, the share price has underperformed the most relevant index by 14%, causing significant
harm to shareholders. This is in stark contrast to the 28% outperformance the Company had achieved year to date prior to the Board’s
shocking announcement.14
III. Browning West’s Clear and Immediate Solution
In light of the critical issues set forth above, Browning West
is demanding the Board immediately take the following three actions:
| i. | Reinstate Mr. Chamandy to the Board and as CEO. The Board must immediately reinstate Mr. Chamandy into his prior role, ensuring
that Gildan’s leadership retains the strategic vision, manufacturing expertise, and culture that are critical for the business.
We have reason to believe that Mr. Chamandy is eager to return to the CEO role. After his reinstatement, the Board will have the ability
to conduct a thoughtfully constructed CEO succession process over the next few years, which can include preparing internal candidates
as well as seeking out the very best external candidates with substantial value creation track records and best-in-class manufacturing
experience. The Board should also reinstate all of Mr. Chamandy’s prior compensation arrangements and incentives. |
| ii. | Remove Mr. Berg as Chair of the Board and initiate a search for a new Chair. Mr. Berg must be immediately removed as Chair,
and he should voluntarily resign from the Board now before his term expires at the Company’s upcoming Annual General Meeting in
May 2024. The Board should immediately commence a search to appoint a new Chair. We recommend that current Director Craig Leavitt assume
the role of Chair on an interim basis as the permanent Chair search is conducted. The criteria for a new Chair will include a track record
of value creation in prior leadership roles and success leading CEO succession plans. Browning West has had conversations with several
high-quality candidates who meet these criteria and are interested in the position. |
| iii. | Appoint Browning West co-founder Peter Lee to the Board as a representative of a significant, long-term shareholder. A shareholder
representative must be immediately added to the Board to bring financial acumen and expertise in investor relations, capital allocation
and succession, especially considering the Board’s egregious missteps as it relates to succession planning. Based on (i) our deep
knowledge of the Company, (ii) our experience leading public company CEO and Chair appointments, and (iii) our strong relationship with
the broader management team, we believe that Mr. Lee will be a very effective Director. Mr. Lee will co-lead the search for a high-quality
Chair to replace Mr. Berg, and Mr. Lee will collaborate with Mr. Leavitt and the Governance Committee on this search. Mr. Lee will make
Browning West’s resources available to Gildan, providing analytical skills, research capabilities and financial expertise to the
Board at no cost. The presence of a long-term oriented director with a large shareholding will substantially improve the Board’s
alignment with shareholders and help restore investor confidence. |
***
Based on normal course conversations we have had with many of the
Company’s large shareholders in recent days, we believe that a substantial percentage of the Company’s owners share many of
our deep concerns.
We remain long-term owners of Gildan and are confident in the value-creation
potential of the business. However, we believe the Board must act urgently to correct its substantial missteps and restore stability to
the Company. If the Board does not act with urgency, we will consider exercising our rights as a shareholder, including with respect to
requisitioning a special meeting to reconstitute the Board.
We look forward to speaking soon to discuss the implementation of
our proposed actions.
Sincerely,
Usman S. Nabi
Peter M. Lee
***
No Solicitation
This press release is for informational purposes only and is not
a solicitation of proxies. If Browning West determines to solicit proxies in respect of any meeting of shareholders of the Company any
such solicitation will be undertaken by way of an information circular or as otherwise permitted by applicable Canadian corporate and
securities laws.
About Browning West, LP
Browning West is an independent investment partnership based in
Los Angeles, California. The partnership employs a concentrated, long-term and fundamental approach to investing and focuses primarily
on investments in North America and Western Europe.
Browning West seeks to identify and invest in a limited number of
high-quality businesses and to hold these investments for multiple years. Backed by a select group of leading foundations, family offices,
and university endowments, Browning West's unique capital base allows it to focus on long-term value creation at its portfolio companies.
___________________________
1 Bloomberg market data as of December 13, 2023 and represents total return since June 17, 1998 IPO through December 8, 2023.
Adjusted EPS CAGR measured from FY1998 through FY2023 from Gildan Annual Report and Gildan guidance.
2 Adjusted EPS CAGR measured from FY2019 to FY2023 based on Gildan Annual Report and FY2023 Gildan guidance.
3 Target price derived from applying 15 – 20x P/E multiple to Browing West two year EPS estimate of $4.
4 Fruit of the Loom 1999 and 2000 10-Ks, Bloomberg market data as of December 13, 2023 and represents share price performance
from September 8, 1997 through May 1, 2000. Activewear segment revenue and operating earnings measured from 1997 through 2000, the period
which Tyra served as Executive Vice President and then President of Activewear. Tyra was appointed President of Retail in December 1999
in addition to his role as President of Activewear.
5 Fruit of the Loom 1999 and 2000 10-Ks. Represents average Activewear segment operating margin from 1997 through 2000. Gildan
operating margin target from March 2022 Investor Day presentation.
6 Gildan Annual Reports, Bloomberg market data as of December 13, 2023. Net earnings growth measured from 1997 through 1999
and stock performance measured from June 17, 1998 IPO through May 1, 2000.
7 Broder Bros., Co. public SEC filings including Amended S-4 filed April 16, 2004, 2004 10-K and 2005 10-K. Net income measured
from 1999 (year prior to Tyra’s appointment as CEO) through 2005.
8 Broder Bros., Co. public SEC filings including Amended S-4 filed April 16, 2004, 2004 10-K and 2005 10-K. Average operating
margin measured from 2000 through 2005.
9 Broder Bros., Co. 2008 10-K. In May 2009, the Company completed an exchange offer which resulted in holders of Senior Notes
due October 15, 2010 being exchanged for newly issued Senior Payment-in-Kind Notes due October 15, 2013 and 96% of the pro forma equity.
Estimate of equity value loss assumes Broder Brothers was valued at a 10x FY2008 Adjusted EBITDA multiple pre- and post-exchange offer.
10 Gildan Annual Reports, Bloomberg market data as of December 13, 2023. Net earnings growth measured from 2000 through 2005
and stock performance measured from May 1, 2000 through December 30, 2005.
11 Bloomberg market data as of December 13, 2023 and represents total return from June 15, 2014 through December 31, 2019.
Revenue measured from 2014 through 2018 from Industrial Services of America 2014 and 2018 10-Ks.
12 Mr. Tyra has served as an operating partner at Southfield Capital for both their private equity and mezzanine funds. Per
their website, their private equity strategy targets companies with between $4 and $15 million of EBITDA and a minimum $3 million of EBITDA
for their mezzanine strategy.
13 Article written by Chris Otts published December 12, 2023 on WDRB.com titled “Former Louisville AD Vince Tyra to lead
global clothing maker.”
14 Bloomberg market data as of the writing of this letter at 10:30am EST on December 14, 2023. Underperformance represents
total return for Gildan stock relative to the Russell 2000 Index from December 8, 2023 through 10:30am EST December 14, 2023. Gildan outperformance
relative to the Russell 2000 year to date calculated as the difference between the total return for Gildan and the Russell 2000 between
December 31, 2022 and December 8, 2023.
Contacts
Browning West
info@browningwest.com
310-984-7600
Longacre Square Partners
Charlotte Kiaie / Scott Deveau, 646-386-0091
browningwest@longacresquare.com
Exhibit 99.2
Browning West Sends Letter to Gildan Activewear’s
Board Regarding the Need to Heed Unprecedented Shareholder Feedback and Reinstate Glenn Chamandy as CEO
Browning West Increases Its Ownership
Position to ~4.8% of the Company's Outstanding Shares
Eight Investors Holding More Than 33%
of Gildan’s Outstanding Shares Have Now Publicly Echoed Browning West’s Concerns
Browning West is Prepared to Requisition
a Special Meeting to Reconstitute the Board if It Continues to Ignore Shareholder Feedback
December 20, 2023 07:00 AM Eastern Standard Time
LOS ANGELES--(BUSINESS WIRE)--Browning
West, LP, which beneficially owns approximately 4.8% of the outstanding shares of Gildan Activewear Inc. (NYSE: GIL) (TSX: GIL) (“Gildan”
or the “Company”), today issued the following letter to the Company’s Board of Directors (the “Board”).
December 20, 2023
Gildan Activewear Inc.
600 Maisonneuve Blvd W #3300
Montreal, QC H3A 3J2
Attn: The Board of Directors
Members of the Board of Directors,
Browning West, LP (together with its affiliates, “Browning
West” or “we”) is an investment management firm with a long-term investing horizon that owns approximately 4.8% of Gildan
Activewear Inc.’s (“Gildan” or the “Company”) outstanding common shares, making us one of the Company’s
largest shareholders. While we recently demonstrated our confidence in Gildan by increasing our ownership stake, the poorly-aligned Board
has spent the past 10 days initiating a blatant entrenchment maneuver with a lone shareholder while showing a complete lack of regard
for the broad and unprecedented shareholder opposition to the Board’s actions. Since the publication of our December 14th
letter, eight shareholders, who collectively own more than 33% of the Company’s outstanding shares, have publicly echoed Browning
West’s concerns. These investors are some of the Company’s longest-tenured shareholders and have a deep understanding of the
business. We also have reason to believe there are many other shareholders who share our concerns but have yet to express them publicly.
With each passing day, the Board’s apparent arrogance and indifference validate that substantial change is urgently needed in Gildan’s
boardroom.
Today, we are writing to urge you to implement the three following
concrete actions, which create the best path forward for stakeholders:
| 1. | Reinstate Glenn Chamandy as CEO; |
| 2. | Remove Donald Berg as Chair, and; |
| 3. | Appoint Browning West Co-Founder Peter Lee as a shareholder representative to the Board. |
If you continue to ignore the feedback of more than 33% of shareholders,
Browning West is fully prepared to requisition a Special Meeting of Shareholders to hold the Board accountable for its actions and prevent
the further destruction of value.1 Shareholders will not tolerate the Board doubling down on its poorly conceived succession
and its backroom deal in exchange for an individual investor’s support.
To disregard shareholders and employees at this critical juncture
would only further tarnish the Board’s reputation and demonstrate its utter lack of respect for sound corporate governance. Consider
the following:
- Gildan Shareholders Have Spoken by Publicly Echoing
Browning West’s Concerns: A critical mass of shareholders have signaled their alignment by publicly echoing our concerns
and calling for the Board to reinstate Mr. Chamandy as CEO. Following our December 14th letter to the Board, investors that
include Browning West LP, Jarislowsky Fraser Ltd., Cooke & Bieler LP, Pzena Investment Management, LLC, Turtle Creek Asset Management
Inc., Janus Henderson, Oakcliff Capital and Anson Funds have publicly called for the Board to reappoint Mr. Chamandy as CEO. These shareholders,
who represent over 33% of Gildan’s outstanding shares, have taken it upon themselves to ensure their respective voices are heard
in seeking to protect the long-term value of Gildan and the interests of all stakeholders. These voices are in addition to numerous shareholders
who we understand share these concerns, but have not yet spoken publicly.
- Gildan Employees Have Also Spoken by Selling Substantial
Amounts of Stock: Recent substantial share sales in excess of $11.7 million by senior executives signal a lack of confidence in
the Board and suggest that employees fear Vincent Tyra’s appointment may lead to the further destruction of shareholder value. These
sales also increase the risk of management turnover. Over the past week, multiple senior executives have made substantial share sales:
CFO Rhodri Harries sold $6.8 million in Gildan shares; President of Manufacturing Benito Masi sold $4.1 million in Gildan shares; President
of Sales, Marketing and Distribution Chuck Ward sold $702,000 in Gildan shares; and SVP of Sales North America Michael Schroeder sold
$104,000 in Gildan shares. Although Gildan’s senior executives cannot share their views publicly, they are clearly voting with their
wallets.
The Board’s “check-the-box” outreach to us this
week has been wholly unsatisfactory because it failed to address our substantive concerns on succession planning and Mr. Tyra’s
extremely poor track record. It is, however, noteworthy that in all our conversations with Mr. Berg, he told us that Mr. Chamandy has
the “highest integrity.” We understand that other major shareholders remain deeply troubled by the Board’s ever-evolving
and illogical explanations for its botched CEO succession process.
The unprecedented nature of the public shareholder outcry and the
stock sales of senior executives are evidence enough that the Board should immediately meet our three demands. We will not hesitate to
hold the Board accountable for further delay in rectifying this unfortunate situation – of which the Board’s actions are the
sole cause.
Sincerely,
Usman S. Nabi Peter
M. Lee
***
No Solicitation
This press release is for informational purposes only and is not
a solicitation of proxies. If Browning West determines to solicit proxies in respect of any meeting of shareholders of the Company any
such solicitation will be undertaken by way of an information circular or as otherwise permitted by applicable Canadian corporate and
securities laws.
Disclaimer for Forward-Looking Information
Certain information in this news release may constitute “forward-looking
information” within the meaning of applicable securities legislation. Forward-looking statements and information generally can be
identified by the use of forward-looking terminology such as “outlook,” “objective,” “may,” “will,”
“expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,”
“plans,” “continue,” or similar expressions suggesting future outcomes or events. Forward-looking information
in this news release may include, but is not limited to, statements of Browning West regarding (i) how Browning West intends to exercise
its legal rights as a shareholder of the Company, and (ii) its plans to make changes at the Board and management of the Company.
Although Browning West believes that the expectations reflected
in any such forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. Such
forward-looking statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ
materially from those contained in the statements including, without limitation, the risks that (i) the Company may use tactics to thwart
the rights of Browning West as a shareholder and (ii) the changes being demanded by Browning West, may not proceed for any reason whatsoever.
Except as required by law, Browning West does not intend to update these forward-looking statements.
Advisors
Olshan Frome Wolosky LLP is serving as legal counsel, Goodmans LLP
is serving as Canadian legal counsel and Longacre Square Partners is serving as strategic advisor to Browning West.
About Browning West, LP
Browning West is an independent investment partnership based in
Los Angeles, California. The partnership employs a concentrated, long-term and fundamental approach to investing and focuses primarily
on investments in North America and Western Europe.
Browning West seeks to identify and invest in a limited number of
high-quality businesses and to hold these investments for multiple years. Backed by a select group of leading foundations, family offices,
and university endowments, Browning West's unique capital base allows it to focus on long-term value creation at its portfolio companies.
1 Since we delivered our letter to the Board on December
14, shareholders collectively owning more than 33% of Gildan’s outstanding shares have publicly voiced their support for Mr. Chamandy’s
reinstatement as Gildan’s CEO.
Contacts
Browning West
info@browningwest.com
310-984-7600
Longacre Square Partners
Charlotte Kiaie / Scott Deveau, 646-386-0091
browningwest@longacresquare.com
Exhibit 99.3
Browning West Issues Letter to Gildan Activewear
Shareholders Announcing Intent to Requisition Special Meeting to Reconstitute Board of Directors
Special Meeting Would Empower Shareholders
to Improve Gildan’s Board by Voting to Replace Five Incumbent Directors
Replacement Slate Includes Five High Quality
Director Candidates With Strong Track Records of Value Creation, Expertise in Successful Succession Planning, and Relevant Industry Experience
Urges Gildan’s Board to Refrain From
Taking Actions to Entrench Itself or Delay the Special Meeting
December 29, 2023 03:00 PM Eastern Standard Time
LOS ANGELES--(BUSINESS WIRE)--Browning
West, LP (together with its affiliates, “Browning West” or “we”) is a significant, long-term shareholder of Gildan
Activewear Inc. (NYSE: GIL) (TSX: GIL) (“Gildan” or the “Company”), beneficially owning approximately 5.0% of
the Company’s outstanding shares.
Today, Browning West issued a letter to shareholders announcing
its intent to requisition a Special Meeting of Gildan Shareholders (the “Special Meeting”) to provide shareholders an opportunity
to reconstitute Gildan’s Board of Directors (the “Board”) by removing five incumbent directors and installing five highly
qualified individuals: Michael Kneeland, Glenn Chamandy, Peter Lee, Karen Stuckey, and J.P. Towner. The proposed slate not only remedies
the Board’s mishandled CEO succession, but more importantly will establish the highest quality governance in the Company’s
history, laying the foundation for the next chapter of value creation. Browning West is introducing its proposed director candidates as
soon as they were confirmed to provide shareholders ample time to review the strength of their professional backgrounds, track records,
and how their experience is both relevant and would be additive to Gildan’s boardroom. Meanwhile, Browning West is finalizing the
technical details associated with the formal requisition.
The full text of today’s letter is below.
***
December 29, 2023
Fellow Shareholders,
Browning West is a significant and long-term shareholder of Gildan,
with a beneficial ownership position of approximately 5.0% of the Company’s outstanding shares. Over the past two weeks, we have
grown concerned with the Board’s unwillingness to effectively remedy the broad and unprecedented shareholder opposition to its recent
actions. Since the Board terminated Gildan’s long-time CEO and Co-Founder Glenn Chamandy without cause and announced the appointment
of Vincent Tyra as his replacement, the Company’s stock has underperformed the most relevant index by 19%, implying more than $1
billion USD of value destruction.1 What’s more, the Board has ignored the independent feedback of nine separate investors
who collectively hold more than 35% of Gildan’s outstanding shares. Each of these investors has publicly vocalized their concerns
about the Board’s handling of succession and called for the reinstatement of Mr. Chamandy.
A critical mass of long-standing Gildan shareholders has clearly
lost confidence in the current Board due to its failure to carry out its most fundamental responsibility: selecting and retaining the
best possible CEO. In light of the clear need for better judgement and new perspectives in the boardroom, we intend to requisition Gildan
to convene a Special Meeting, where shareholders could vote to:
| 1. | Remove five of the incumbent directors from Gildan’s Board; and |
| 2. | Appoint five highly qualified director candidates – Michael Kneeland, Glenn Chamandy, Peter Lee, Karen Stuckey, and J.P. Towner
– to the Board. |
We believe the Special Meeting will represent a referendum on the
Board’s actions and, if successful, the newly reconstituted Board will have a mandate to immediately take the following actions:
(i) Appoint Mr. Kneeland as independent, non-executive Chair, (ii) Terminate Mr. Tyra’s employment, and (iii) Appoint Mr. Chamandy
as CEO. We expect that Mr. Kneeland and the re-constituted Board will reassess committee composition and reassign committee chair roles.
The case for change in Gildan’s
boardroom is clear
Gildan’s Board has demonstrated it is unwilling to act in
the best interest of the Company and its shareholders. The incumbent directors’ actions have destroyed value for Gildan shareholders
and introduced significant business risk, which we believe must be immediately addressed through a reconstitution of the Board to prevent
further damage to Gildan’s business and its stakeholders.
We believe the Board has made a series of value-destructive decisions,
which include:
| · | Abruptly terminating Mr. Chamandy as CEO without cause, despite his track record of significant value creation evidenced by a 99x
total return for Gildan shareholders over the past 25 years;2 |
| · | Appointing Mr. Tyra as CEO, an individual with (i) a track record of significant value destruction, (ii) a lack of best-in-class experience
in manufacturing and vertical integration, and (iii) insufficient experience managing a large-scale, global organization; |
| · | Ignoring the feedback of nine shareholders, representing over 35% of the Company’s outstanding shares, who have each independently
and publicly voiced opposition to the Board’s CEO succession decisions; |
| · | Defending the Board’s CEO succession process with ever-evolving and inconsistent explanations; and |
| · | Cutting a “white squire” backroom deal with a lone shareholder as an entrenchment tactic. |
As a result of the Board’s actions,
we have assembled a well-rounded slate of five highly qualified director candidates
The proposed nominees collectively have strong track records of
value creation, expertise in successful succession planning, relevant industry and corporate governance experience, as well as proven
management and board service pedigrees in Canada and the U.S. They are:
| · | Michael Kneeland (U.S. Citizen), Chair and Former Chief Executive Officer of United Rentals, Inc. (NYSE: URI), is a renowned leader
with an exceptional record of value creation in a large and operationally complex business, experience overseeing successful CEO succession
processes, and experience working with founders of highly successful businesses. In our experience, the most effective board Chairs are
those individuals who have been successful CEOs in their own executive careers. Former CEOs are able to more effectively mentor current
CEOs and their successors, as opposed to those executives whose careers ended in a functional or divisional role. His experience is highly
relevant given the recently mishandled CEO succession, which was overseen by the current Board. |
| o | Exceptional Record of Value Creation in a Large and Operationally Complex Business: Mr. Kneeland currently serves as the Chair
of United Rentals, Inc. (“United Rentals”), a $51 billion USD enterprise value equipment rental business with over $14 billion
USD of revenue and nearly $7 billion USD of EBITDA.3 Mr. Kneeland became Chair in May 2019, following his retirement as CEO.
United Rentals stock has returned 17x or nearly 19% annualized over the past 16 years, generating over $36 billion USD in value spanning
Mr. Kneeland’s CEO and Chair tenure at United Rentals from 2007 to today.4 Under Mr. Kneeland’s leadership as CEO,
United Rentals also invested over $10 billion USD in net capital expenditures and nearly $8 billion USD in acquisitions which drove significant
value creation.5 United Rentals’ revenue, EBITDA, and free cash flow per share grew 2.5x, 3.8x, and 9.5x, respectively,
during his CEO tenure.6 During his tenure as CEO and Chair, United Rentals’ operating margins improved over 1,000 basis
points to over 28%, which is well above the 18 to 20% operating margins shareholders expect from Gildan.7 Mr. Kneeland’s
leadership achievements are profiled in the book “Lessons from the Titans,” which highlights his team’s operational
excellence, kaizen mentality, and investment discipline. These skills are directly relevant to Gildan’s operations. |
| o | Experience Leading Successful CEO Succession Processes: When he was CEO, Mr. Kneeland carefully developed internal succession
candidates, and in 2019 he successfully transitioned the United Rentals CEO role to COO Matthew Flannery. Since Mr. Flannery became CEO,
United Rentals’ stock has returned 4.4x, or 37% annualized, continuing Mr. Kneeland’s strong track record of value creation.8
|
| o | Experience Working with Founders of Successful Businesses: United Rentals was initially led by its founders in the first six
years of the company’s existence. Mr. Kneeland had extensive experience working with these founders, who remained on United Rentals’
board while Mr. Kneeland was in a senior leadership position. |
| o | Notable Leadership Roles: Mr. Kneeland currently serves as Chair of Maxim Crane Works and as a director on the board of American
Tire Distributors, Inc. In 2015, he was appointed to the National Advisory Board for the Johns Hopkins Berman Institute of Bioethics. |
| · | Glenn Chamandy (Canadian Citizen), Co-Founder and Former Chief Executive Officer of Gildan, has a strong record of value creation,
an unrivaled understanding of Gildan’s low-cost vertically integrated apparel manufacturing business model, and experience leading
a complex global business. His experience is highly relevant given his role as Gildan’s CEO for almost 20 years. |
| o | Strong Record of Value Creation: Mr. Chamandy has over 40 years of experience leading Gildan, with almost 20 years of experience
serving as CEO. From 1998 to 2023, Mr. Chamandy was responsible for delivering nearly 16% annual growth in earnings-per-share. During
this time, Gildan’s stock returned 99x, or a nearly 20% annualized return, outperforming all of Gildan’s competitors, many
of which were forced to exit Gildan’s market or were acquired by Gildan.9 Even through a challenging economic environment,
Mr. Chamandy enhanced market share and grew EPS at Gildan by 54% in the past four years.10 |
| o | Unrivaled Understanding of Gildan’s Low-Cost Vertically Integrated Apparel Manufacturing Business Model: Mr. Chamandy
devoted his entire career to building Gildan into a low-cost, vertically integrated manufacturing business, investing over $2 billion
USD of capital expenditures over the past 20 years.11 Much of Gildan’s success can be attributed to the low-cost position,
which Mr. Chamandy architected and maintained for decades. |
| o | Experience Leading a Complex Global Business: Mr. Chamandy oversaw Gildan’s growth to over $3 billion USD of annual sales
and over $700 million USD of EBITDA. He led the expansion of Gildan’s operations into Central America and Bangladesh. |
| o | Notable Leadership Roles: In 2015, Mr. Chamandy founded The Chamandy Foundation, a private family foundation with a vision
of improving the lives of the younger generation, through funding areas such as health and wellness, education, poverty, research, and
the environment. |
| · | Peter Lee (U.S. Citizen), Co-Founder and Partner of Browning West, possesses extensive financial and capital allocation acumen,
experience leading public company CEO searches, and brings substantial alignment with shareholders given that Browning West is one of
Gildan’s largest long-term shareholders. His experience is highly relevant given the current Board has recently taken actions that
have destroyed substantial value for shareholders. |
| o | Extensive Financial and Capital Allocation Acumen and Prior Public Company Board Experience: Mr. Lee is a Partner and Co-Founder
of Browning West, where he plays a leading role in investment research and capital allocation. Mr. Lee previously served on the board
of Countryside Partnerships plc (“Countryside”), and he played a leading role in enabling the merger of Countryside and Vistry
Group plc to create the largest homebuilder by volume in the U.K.12 Prior to joining Browning West, Mr. Lee worked at Criterion
Capital Management, Grey Mountain Partners, and Lazard. |
| o | Experience Leading Public Company CEO Searches: The Partners of Browning West have co-led seven CEO or Chair searches at public
companies, including co-leading a CEO search to resolve a weak succession plan at Countryside Properties plc, where Mr. Lee served as
a director. If appointed to Gildan’s Board, Mr. Lee would harness all of Browning West’s resources to assist Gildan with succession
planning and other matters. |
| o | Strong Alignment with Shareholders: If elected to the Board, Mr. Lee would bring a shareholder perspective and strong alignment
to the boardroom, considering Browning West is one of Gildan’s top long-term shareholders. Mr. Lee has been deeply involved in the
firm’s investment in Gildan, having conducted 46 meetings with senior leadership and multiple visits to the Company’s manufacturing
sites. |
| · | Karen Stuckey (U.S. Citizen), Former Senior Vice President at Walmart Inc. (NYSE: WMT), has extensive experience in apparel, led
large-scale businesses with an international presence, and operated within a low-cost business model. Her experience is highly relevant
given Gildan’s low-cost business model and the fact that no current Gildan directors have mass market apparel experience. |
| o | Extensive Expertise in Apparel, Including Private Label: Ms. Stuckey has nearly two decades of experience as a senior leader
at Walmart Inc. (“Walmart”), most recently as Senior Vice President, Private Brand within the General Merchandise segment.
In this role, Ms. Stuckey led the development of Walmart’s private label strategy across more than 100 verticals, including apparel.
It is noteworthy that she was responsible for introducing Gildan private label products at Walmart. Ms. Stuckey also served as President
of the Casualwear Division of Hanesbrands Inc. (NYSE: HBI) from 2000 to 2004, which was a competitor to Gildan at the time.13
These experiences are highly relevant as she can provide both a competitor’s and customer’s perspective on Gildan and would
be the first member of the Board with direct mass market apparel product knowledge. |
| o | Experience Operating Businesses of Significant Scale: Ms. Stuckey oversaw a segment with over $40 billion USD in annual revenues
with full P&L responsibility and led the development of strategy and operational execution. Walmart operates more than 10,500 retail
stores across 24 countries and is the world’s largest private employer. |
| o | Experience Operating Internationally with a Global Supply Chain: Ms. Stuckey oversaw global operations with a sourcing budget
of over $20 billion USD and a supply chain across multiple continents. Ms. Stuckey has direct experience working in countries in which
Gildan operates throughout Central America and Asia. |
| o | Operated Within a Low-Cost Business Model: During a nearly two-decade career at Walmart, Ms. Stuckey was steeped in a culture
and operating model that emphasized the importance of low-cost operations. The success of Walmart’s low-cost model is widely considered
one of the great case studies in long-term value creation. |
| · | J.P. Towner (Canadian Citizen), Former Chief Financial Officer of Dollarama Inc. (TSX: DOL) and Current Chief Financial Officer
of RONA inc., has extensive experience working in low-cost vertically integrated businesses focused on value-oriented consumer products
with successful founders and has a track record of delivering strong financial results. His experience is highly relevant given Gildan’s
focus on vertical integration and maintaining a low-cost advantage. |
| o | Experience in Vertically Integrated Businesses Focused on Value-Oriented Consumer Products: Mr. Towner is the former Chief
Financial Officer of Dollarama Inc. (“Dollarama”), a $23 billion USD enterprise value vertically integrated retailer focused
on value-oriented products based in Canada. Dollarama is vertically integrated through sourcing, distribution, and retail and focuses
on delivering the best value to its customers in Canada, which is highly relevant to Gildan’s own vertically integrated and low-cost
business model. In addition to its Canadian operations, Dollarama also operates a highly successful multi-national strategy across four
countries in Central and South America. During Mr. Towner’s tenure, Dollarama’s revenue grew at nearly 14% annually and earnings
per share grew at nearly 25% annually. These strong operating results underpinned a total return of 84% and an annualized return of 27%
for Dollarama’s stock during Mr. Towner’s tenure.14 |
| o | Track Record of Delivering Strong Financial Results: Mr. Towner is a seasoned finance executive with more than 15 years of
experience in corporate and financial strategy, capital markets, and risk management. As Chief Financial Officer of Dollarama, Mr. Towner
contributed to a highly successful capital allocation strategy and returned significant value to shareholders; in addition he was instrumental
in improving Dollarama’s EBITDA margins. He currently serves as the Chief Financial Officer of RONA inc. (“RONA”), one
of Canada's leading home improvement retailers, currently owned by a private equity firm. RONA generated over $5 billion USD in revenue
in 2022, operating or servicing 425 corporate and affiliated dealer stores with a team of 22,000 employees.15 Mr. Towner also
spent five years as Executive Vice-President and Chief Financial Officer of Pomerleau Inc. (“Pomerleau”), one of the largest
construction companies in Canada, which generated nearly $2.4 billion USD in revenue in 2021.16 During his tenure, he contributed
to increasing the revenue and profitability of Pomerleau’s operations by 3x and 5x, respectively. Additionally, Mr. Towner spent
nearly 10 years with BMO Capital Markets. |
| o | Experience Working with Founders of Highly Successful Businesses: Mr. Towner has worked extensively with independent board
members and board committees of public and private companies, as well as representatives from the founding families of Dollarama and Pomerleau. |
We have invested a great deal of time, energy, and resources to
present a thoughtful slate of proposed director nominees, who, if elected, will ensure our collective interests as Gildan shareholders
are protected now and for the long-term. We will strongly urge the Board to refrain from taking any near-term actions to entrench itself
and to call the Special Meeting as expeditiously as possible once it has been requisitioned. Any attempts to delay the Special Meeting
will be a clear sign of further entrenchment, continued disregard for shareholders, and will increase the damage currently being inflicted
on the Company and its stakeholders. We will not hesitate to exercise all of our rights as shareholders if the Board uses any further
entrenchment tactics.
Sincerely,
Usman S. Nabi Peter
M. Lee
***
No Solicitation
This press release is for informational purposes only and is not
a solicitation of proxies. If Browning West determines to solicit proxies in respect of any meeting of shareholders of the Company any
such solicitation will be undertaken by way of an information circular or as otherwise permitted by applicable Canadian corporate and
securities laws.
Disclaimer for Forward-Looking Information
Certain information in this news release may constitute “forward-looking
information” within the meaning of applicable securities legislation. Forward-looking statements and information generally can be
identified by the use of forward-looking terminology such as “outlook,” “objective,” “may,” “will,”
“expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,”
“plans,” “continue,” or similar expressions suggesting future outcomes or events. Forward-looking information
in this news release may include, but is not limited to, statements of Browning West regarding (i) how Browning West intends to exercise
its legal rights as a shareholder of the Company, and (ii) its plans to make changes at the Board and management of the Company.
Although Browning West believes that the expectations reflected
in any such forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. Such
forward-looking statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ
materially from those contained in the statements including, without limitation, the risks that (i) the Company may use tactics to thwart
the rights of Browning West as a shareholder and (ii) the actions being proposed and the changes being demanded by Browning West, may
not take place for any reason whatsoever. Except as required by law, Browning West does not intend to update these forward-looking statements.
Advisors
Olshan Frome Wolosky LLP is serving as legal counsel, Goodmans LLP
is serving as Canadian legal counsel and Longacre Square Partners is serving as strategic advisor to Browning West.
About Browning West, LP
Browning West is an independent investment partnership based in
Los Angeles, California. The partnership employs a concentrated, long-term and fundamental approach to investing and focuses primarily
on investments in North America and Western Europe.
Browning West seeks to identify and invest in a limited number of
high-quality businesses and to hold these investments for multiple years. Backed by a select group of leading foundations, family offices,
and university endowments, Browning West's unique capital base allows it to focus on long-term value creation at its portfolio companies.
1 Bloomberg market data as of December 28, 2023 and represents
total return relative to the Russell 2000 index since December 8, 2023. Loss in market value calculated as difference between Gildan market
capitalization assuming same performance as Russell 2000 since December 8, 2023 vs. Gildan actual return through December 28, 2023.
2 Bloomberg market data as of December 28, 2023 and represents total return since June 17, 1998 IPO through December 8, 2023.
3 Bloomberg market data as of December 28, 2023. FY2023E consensus revenue and EBITDA estimates for United Rentals.
4 Bloomberg. Represents total return and change in market capitalization from June 4, 2007 to December 28, 2023.
5 United Rentals Annual Reports & Quarterly Earnings Press Releases (2007 – 2019).
6 United Rentals Annual Reports & Quarterly Earnings Press Releases (2007 – 2019). Represents change in revenue,
EBITDA, and free cash flow per share from 2007 to 2019.
7 United Rentals Annual Reports & Quarterly Earnings Press Releases (2007 – 2023). Margin expansion represents operating
margins from 2007 to 2023 based on Company EBITDA guidance and Bloomberg consensus estimates for D&A as of December 28, 2023.
8 Bloomberg. United Rentals total return from May 8, 2019 to December 28, 2023.
9 Bloomberg market data as of December 28, 2023 and represents total return since June 17, 1998 IPO through December 8, 2023.
Adjusted EPS CAGR measured from FY1998 through FY2023 from Gildan Annual Report and Gildan FY2023 guidance.
10 Adjusted EPS CAGR measured from FY2019 to FY2023 based on Gildan Annual Report and FY2023 Gildan guidance.
11 Gildan 2022 Investor Day and 2022 Annual Report.
12 Vistry Group plc is projected to be the largest U.K. homebuilder by volume in FY2024 based on Bloomberg consensus estimates
as of December 28, 2023.
13 Hanesbrands Inc. was a division of Sara Lee Corporation during Ms. Stuckey’s tenure prior to its spin-off in 2006.
Prior to becoming President of the Casualwear Division, Ms. Stuckey served as President of Just My Size Company within Hanesbrands Inc.
from 1997 to 2000.
14 Dollarama Annual and Quarterly Reports (FY2021 to October 2023 LTM). Dollarama total return from March 1, 2021 to September
12, 2023.
15 RONA website – “News” section.
16 Pomerleau 2021 Annual Report. Assumes an average USD to CAD foreign exchange rate of 1.2535.
Contacts
Browning West
info@browningwest.com
310-984-7600
Longacre Square Partners
Charlotte Kiaie / Scott Deveau, 646-386-0091
browningwest@longacresquare.com
Exhibit 99.4
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k)(1)(iii) under
the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a Statement
on Schedule 13D (including additional amendments thereto) with respect to the common shares of Gildan Activewear Inc., a Canadian corporation.
This Joint Filing Agreement shall be filed as an Exhibit to such Statement.
Dated: January 8, 2024
| |
Browning West, LP |
| |
|
| |
By: |
/s/ Samuel Green |
| |
|
Name: |
Samuel Green |
| |
|
Title: |
Chief Compliance Officer and Chief Financial Officer |
| |
/s/ Usman Nabi |
| |
Usman Nabi |
Gildan Activewear (NYSE:GIL)
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