Parlux settles with shareholder Nussdorf, shares jump
today Feb 6, 2007
Feb 6 (Reuters) - Parlux Fragrances Inc. PARL.O said it settled its disputes with shareholder Glenn Nussdorf, agreeing to replace chief executive and two other board members with Nussdorf's nominees.
Shares of Parlux, which licenses for Paris Hilton fragrances and accessories, as well as fragrances under names such as XOXO, Maria Sharapova and Andy Roddick, rose about 15 percent in late trade.
The reconstituted six-member board will have three nominees of Nussdorf, the company said in a statement.
As part of the settlement, Nussdorf also terminated his consent solicitation from Parlux stockholders to replace the company's directors, while Parlux dismissed with prejudice its lawsuit against Nussdorf, his nominees and some companies controlled by Nussdorf.
The Fort Lauderdale, Florida-based company said Nussdorf agreed not to make any proposal to acquire Parlux for two years, unless the proposal is to acquire all shares at not less that $11 a share.
Nussdorf will get $1 million as reimbursement from Parlux for expenses related to the consent solicitation and litigation.
Nussdorf, who owns about 37 percent of E Com Ventures Inc. ECMV.O, a customer of Parlux, began to acquire an increased stake in Parlux last September, and currently owns about 12.2 percent in the company.
NEW INTERIM CEO
Neil Katz, a nominee of Nussdorf, will be the interim CEO, replacing CEO Ilia Lekach, Parlux said.
Katz previously served as chief executive and president of Gemini Cosmetics Inc. and president of Liz Claiborne Cosmetics, the fragrance division of Liz Claiborne.
Wedbush Morgan Securities analyst Rommel Dionisio, in a note to clients said the stepping down of CEO should remove some overhang from the stock.
Dionisio said shares of Parlux should trade at a considerable discount to the peer group average, citing decelerating sales and earnings performance in recent quarters amongst other risks.
Lekach will receive $1.2 million as severance pay and an additional $1.2 million for his consulting services and non-competition covenants, Parlux said.
A group led by Lekach, who currently owns about 7.2 percent in Parlux, withdrew an offer to take the company private last July after other parties offered to acquire some of Parlux's brands.
Lekach will continue to serve as a consultant to Parlux and will assist with fragrance brand licenses and international distribution of Parlux products for four years, the company said.
In August, a shareholder had filed a lawsuit, claiming that the company, Lekach and Chief Financial Officer Frank Buttacavoli violated the U.S. Securities Exchange Act by issuing public statements suggesting that Parlux revenues were growing and the company was well-positioned to generate strong profits. (Reporting by Ankur Relia, Vikram Subhedar in Bangalore)
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