RICHMOND, Va. (AP) - Circuit City Stores Inc. is hoping to meet with an
investor who is seeking the ouster of the struggling company's chief executive
and board of directors.
In a letter dated Friday and sent to Wattles Capital Management, the
nation's No. 2 consumer electronics retailer said it plans to contact the firm's
manager, Mark J. Wattles, to schedule a meeting.
"It appears to me from your letter and certain other statements that you may
not have a full understanding of the company's current strategy and challenges,"
wrote Mikael Salovaara, Circuit City's lead director. He added that a
face-to-face meeting could produce a more productive dialogue between the
company and the investor group.
Wattles said he is looking forward to speaking with the company.
"The good news is they are interested in meeting," Wattles told The
Associated Press. "I would assume a productive meeting doesn't mean they just
want to meet with me face-to-face to tell me 'no,' but know knows?"
Wattles Capital, which owns a 6.5 percent stake in the company, said in a
letter earlier this week that turnaround efforts under CEO Philip Schoonover
have been "disastrous" and he should be replaced. He also suggested other
changes to help "unlock hundreds of millions of value in the near term and
billions of value in the long term."
The Richmond-based company reported a $207 million loss in its fiscal third
quarter, and anticipates a "modest loss" in the fourth quarter, the period that
includes the bulk of the crucial holiday-shopping season.
Wattles, founder of the Hollywood Entertainment video-rental chain, wants to
oust all of Circuit City's 12-member board and nominate five directors. The
owner of the 32-store Ultimate Electronics chain also said in his letter that
Circuit City should hire an investment bank to evaluate any possibility for a
takeover offer.
The proposals, if accepted, would be aired during Circuit City's annual
meeting in June.
In the letter, Circuit City urged Wattles to allow its nominating committee
to meet with its proposed directors without conditions. Wattles had said the
proposed directors could be interviewed only if the company would commit to
nominating them to the board.
Shares of Circuit City closed up 28 cents to $4.78 on Friday. The stock has
traded between $3.44 and $19.12 during the past year.
The consumer electronics retailer is second to Best Buy Co. Inc.
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