RICHMOND, Va. — Regulatory filings indicate a proxy battle between an activist shareholder and electronics retailer Circuit City Stores Inc. is imminent.
Wattles Capital Management, which owns a 6.5 percent stake in the nation’s second-largest electronics retailer, is asking shareholders to elect five new directors for Circuit City’s 12-member board and oust the others, according to a preliminary proxy statement filed Monday with the Securities and Exchange Commission.
Mark Wattles, owner of the Thornton-based 32-store Ultimate Electronics chain, has criticized Circuit City’s turnaround efforts, placing blame on chief executive Philip Schoonover and asking for him to be replaced.
In the filing, Wattles questioned the existing board’s willingness to hold senior management accountable for poor performance at Circuit City, which lost $319.9 million in its last fiscal year compared with a loss of $8.3 million during the prior year.
“Without change to the existing board, we fear that the company’s intrinsic value will continue to erode further,” Wattles wrote in the filing for Circuit City’s annual meeting scheduled for June 24.
In a preliminary proxy statement Thursday, Circuit City urged shareholders to reject Wattles’ proposals, saying they are not in the company’s best interest.
Wattles, founder of the Hollywood Entertainment video-rental chain, also noted the company’s failure to provide the due diligence necessary for Blockbuster Inc. to examine Circuit City’s finances in order to make a definitive bid for the company.
