Coliseum Capital files lawsuit to invalidate Purple Innovation preferred stock

Coliseum Capital Management, which identifies itself as the largest stockholder of Purple Innovation, owning approximately 44% of the common stock, announced that it has filed a lawsuit in the Delaware Court of Chancery to invalidate Purple’s recently issued "Proportional Representation Preferred Linked Stock," which Coliseum believes deprives Purple stockholders of a fair and democratic election of directors at the Company’s 2023 Annual Meeting. "The preferred stock – issued without the approval of Purple’s stockholders and in direct response to Coliseum’s nomination of directors to the Purple Board of Directors – violates the Company’s charter, fundamentally transforms the "one share, one vote" structure used to elect Company directors into a cumulative voting regime that prevents holders of a majority of the common stock from electing or removing the full board, and is a bad faith attempt by the Special Committee of Purple’s Board to entrench itself and thwart shareholder democracy. Specifically, the preferred stock issuance violates those provisions of the Company’s charter that limit the form of stock distributions to holders of the Company’s Class A shares to additional shares of Class A common stock," Coliseum stated.