Management Turnover as Change Agent

Tuesday, April 29, 2008

CEO Watch - Philip Schoonover, Circuit City, Update 3

As Circuit City CC (NYSE) continues to resist Blockbuster's BBI (NYSE) efforts to merge, the electronics retailer also continues to resist attempts by Wattles Capital Management to change a portion of the board.  To complicate the already difficult situation, a new fly has appeared in the ointment.  While Wattles Capital Management owns just over 6% of Circuit City stock and has continued to put increasing pressure on the firm's management, HPK Investments, who owns just over 9% of the stock has turned activist as well.  When HPK first invested in Circuit City the firm considered their investment as passive.  Just yesterday, the passive nature of HPK's investment changed.  The investment firm filed a new 13D.  In the filing HPK stated,
... On April 28, 2008, HBK Capital Management sent a letter to the Issuer encouraging the Issuer to allow Blockbuster to perform due diligence in connection with Blockbuster's proposal to acquire all of the outstanding shares of Common Stock of the Issuer and to commence good faith negotiations with Blockbuster regarding its proposal. In addition, HBK Capital Management urged the board of directors of the Issuer to create a competitive bidding process in
order to maximize shareholder value...
Circuit city's CEO, Philip Schoonover, now finds himself in an even more precarious position. Pressure is growing from all sides.  It is hard to imagine he can survive with the situation continuing as it is right now. 

Stay tuned.

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1 comment:

Anonymous said...

...poke him with a fork; he's done.