Gildan Activewear shareholder Turtle Creek sees company value at over $60/shr

Turtle Creek Asset Management, a decade-long shareholder of Gildan Activewear issued an open letter to the board of directors of Gildan, stating: “Turtle Creek is a long-term and engaged owner of Gildan. We are deeply troubled with the Board’s latest attempt to avoid the judgement of its shareholders through a purported process to sell the Company. This Board does not have a mandate, nor the confidence of Gildan shareholders, to run a process that could result in the sale of Gildan. The Board’s outrageous and unprecedented actions to date, in the face of massive shareholder opposition are wholly-disqualifying. In fact, we strongly believe that the Board has initiated a sale process in a desperate attempt to avoid the profound professional embarrassment that will befall the directors once they are voted off the board by Gildan’s shareholders. If a meeting of Gildan shareholders were held today, we have a high level of confidence that the shareholders would vote overwhelmingly in favor of the individuals nominated by Browning West LP. Even the release of the news of the sale process was characteristic of the Board’s slapdash approach to governance. The material disclosure that the Board was attempting to sell the Company was reported on by the news media, during regular market hours, citing an emailed statement from a Gildan spokesperson. Unsurprisingly, this prompted regulators to halt trading in Gildan shares approximately 20 minutes later for the duration of the trading day. In the ensuing hours, detailed information about the names of third parties who had indicated interest in purchasing Gildan, along with indicative pricing levels, began appearing in the news media, demonstrating a lack of integrity in the purported process. These leaks ran counter to the interests of potential buyers, which led us to speculate that they originated from Gildan or its advisors. To even a casual market observer, it is so obviously a bad time to initiate a sale process that we have been left stunned in disbelief. Public companies frequently receive unsolicited purchase offers. Just because an offer has been received does not require the Board to seriously entertain it, especially when the Company is in the midst of a boardroom battle. Turtle Creek believes that the process led by the Special Committee is yet another attempt by the Board to evade accountability for its actions. We are concerned that the “sale process” is, at best, a hasty attempt to sell the Company at a price that does not reflect Gildan’s long term potential, or, at worst, a cynical and irresponsible tactic intended to provide a pretext to further delay or influence the annual meeting of Gildan shareholders. For over 25 years, Turtle Creek has done the hard work of analyzing and valuing the companies in which we invest. We think about what the future holds for our companies and the future cash flows the companies could generate. When we do our analysis of Gildan, we arrive at a value of over US$60 per share. Clearly, Gildan is trading at a substantial discount to our view of its value. We and other shareholders do not trust the current Board to act as independent fiduciaries for us. We demand the Board hold the annual meeting of shareholders on an urgent basis and allow shareholders to elect a new Board before further, permanent harm is caused to the Company. We remain steadfast in our resolve to see substantial Board change. The Board still has an opportunity to do the right thing and put an end to an unfortunate chapter in the Company’s history.”