Sun Capital calls Furniture Brands' claims surrounding its board participation unfounded, unwarranted

By Lisa Kerner

Charlotte, N.C., April 17 - SCSF Equities LLC and its affiliates (together, "Sun Capital") responded on Thursday to concerns raised by Furniture Brands International, Inc. regarding Sun Capital's potential participation on the company's board of directors.

The investor has nominated Alan Schwartz, Ira Kaplan and T. Scott King for election to Furniture Brands' eight-member board of directors at the 2008 annual meeting on May 1.

In an April 17 letter to Furniture Brands' board, Sun Capital called the company's concern about "the potential transfer of competitively sensitive information to Sun Capital's portfolio companies in the industry" unfounded.

Sun Capital said it remains willing to enter into a formal nondisclosure/confidentiality agreement with Furniture Brands.

"As a $10 billion private investment firm, we often make investments in companies within the same industries and have implemented these arrangements under similar circumstances," Sun Capital stated in the letter.

Sun Capital said Furniture Brands' concern that the investor's prior interest in acquiring the company might represent a conflict of interest is unwarranted.

"Should Sun Capital decide to submit a formal proposal regarding a strategic transaction, we would expect the board to adhere to market practice and form a special committee of disinterested directors to properly evaluate our proposal and retain outside financial and legal advisors," the letter said.

The committee would not be expected to include King, a Sun Capital employee. Sun Capital said its other two nominees, Schwartz and Kaplan, "are completely independent and have no prior relationship with Sun Capital."

Sun Capital reiterated that it is open to considering all alternatives to maximize shareholder value and could assist in the "pursuit of a more dynamic turnaround strategy" for the company.

The investor announced its nominees on April 3. Sun Capital, with a 9.45% ownership interest in the Hickory, N.C., furniture company, also filed a preliminary proxy statement with the Securities and Exchange Commission.

Sun Capital said Schwartz is Sterling Professor of Law at Yale Law School, Kaplan is chief financial officer of Claire's Stores Inc. and King is managing director of Sun Capital Partners, Inc.

Previously, Sun Capital said it didn't believe the current Furniture Brands board is acting in the best interests of shareholders.

Specifically, Sun Capital said Furniture Brands' board appears to have given little consideration to at least two "serious and credible proposals to acquire the company at prices well above the existing stock price."

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