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Activists win control of Liquor Stores ahead of annual meeting

Liquor Stores N.A., which operates outlets such as Liquor Depot in Edmonton, said on Monday that six out of its eight directors would not stand for re-election at the Edmonton-based retailer’s annual meeting after a month-long proxy battle.

JASON FRANSON/The Globe and Mail

Liquor Stores N.A. Ltd. said on Monday that six out of its eight directors would not stand for re-election at the Edmonton-based retailer's annual meeting after a month-long proxy battle.

These six seats are expected to be filled by nominees of activist fund PointNorth Capital Inc., which owns more than 9 per cent of the company's common shares. PointNorth, a Toronto-based investment firm, waged a public campaign starting on May 15 that proposed to shake up Liquor Stores by taking control of its board.

Shares of Liquor Stores rose 4.3 per cent on Monday to $10.48. The stock is flat so far this year, but has gained 15 per cent over the past 12 months. The company's annual meeting is scheduled for Tuesday.

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Liquor Stores operates 212 stores in Alberta and British Columbia, as well as 40 U.S. outlets in Alaska, Kentucky, Connecticut and New Jersey. PointNorth launched the proxy contest after Liquor Stores' share price retreated over the past five years as it pushed into the United States while facing a downturn in the oil patch, its home market.

The Toronto-based activist firm disclosed it had taken a stake in Liquor Stores last November, and later said that its strategic plans include renovating Canadian stores, finding ways to reduce costs and reviewing ownership of locations in the eastern United States in a bid to generate better results for shareholders.

Liquor Stores, North America's largest publicly traded wine and spirits retailer, has seen its stock price tumble over the last handful of years from $20 to below $10 in 2017. PointNorth, which is backed by the Ontario Municipal Employees Retirement System, says Liquor Stores lost its way by neglecting its Canadian operations and expanding in the U.S. at the expense of its profit margins.

The two current Liquor Stores directors standing for re-election are Gary Collins and Peter Lynch. The six PointNorth nominees are: Derek Burney, Karen Prentice, James Burns, John Barnett, Kenneth Barbet and Richard Perkins; none of whom are are affiliated with PointNorth, according to the firm.

Liquor Stores had offered PointNorth two seats on a nine-person board, but that offer was rejected.

The existing board, which is chaired by veteran director and former Alberta cabinet minister Jim Dinning, had asked shareholders of Liquor Stores to support its own roster of eight directors. The company warned investors that PointNorth was going to "put in place a strategy that will destroy shareholder value."

In early June, the board was offering to pay financial advisers five cents a share for each vote they obtain in favour of the incumbent board, if the slate was elected at Liquor Stores' annual meeting.

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About the Author
Capital Markets Reporter

Christina Pellegrini is a reporter at The Globe and Mail and a regular contributor to Streetwise, covering capital markets, the exchange business and market structure.She writes about the capital markets divisions of BMO, CIBC and National Bank; independent brokerages such as Canaccord Genuity; and the Canadian operations of foreign dealers including JP Morgan, Goldman Sachs, Credit Suisse and Citigroup. More

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