Barington fires back at Syms CEO, calls letter to shareholders 'disingenuous'

By Lisa Kerner

Charlotte, N.C., Jan. 31 - A group of shareholders led by Barington Capital Group, LP and Esopus Creek Advisors LLC responded to a Jan. 28 letter to Syms Corp. shareholders from company chief executive officer Marcy Syms.

The topic of the shareholder letter was the company's decision to deregister and delist its shares from the New York Stock Exchange.

Syms voluntarily delisted its shares and plans to deregister its shares on April 1. The company's stock has fallen by over 32% since the company announced its plans to deregister and delist, according to Barington.

In defending the delisting, Marcy Syms said it was part of a "well-thought plan" that should lead to annual savings of some $750,000.

"Importantly, we anticipate that those annual savings will drop straight to the bottom line, thereby increasing the profitability of our company," Syms explained in her letter, adding that management will be more focused on running the 33 Syms stores.

Marcy Syms described the company's move to the Pink Sheets as "seamless" and said the average daily volume is about the same as it was before the transition.

However, the shareholder group said it is "skeptical that liquidity will not be adversely affected by a move to the Wild West outpost known as the Pink Sheets."

Syms now trades on the Pink Sheets under the symbol "SYMZ."

Esopus Creek managing member Andrew L. Sole noted that the CEO's letter omits that "approximately $80 million in shareholder value has been lost to date as a result of these actions."

"The letter also fails to mention that these actions will deprive shareholders of the protections that regulatory oversight provides investors. Simply put, we are convinced that these actions will severely harm the minority shareholders of Syms Corp.," Sole said in a Barington news release.

"If the company is truly focused on the interests of its public shareholders, we suggest that the board put the decision to deregister and delist to a vote and let the minority shareholders decide for themselves what course of action should be taken," the shareholder group stated in their letter.

Shareholder group takes action

Members of the shareholder group have begun the process of registering some of their shares in their own names and encourages fellow shareholders to do the same.

Syms may not deregister if it has 300 or more shareholders of record. The shareholder group, with a 9.8% stake in Syms, believes there are over 1,000 shareholders of Syms, most of whom have their shares registered in "street name."

The group filed a lawsuit in the Superior Court of the State of New Jersey, Chancery Division - Bergen County, against Syms' board of directors alleging that the directors breached their fiduciary duties in causing the company to delist its common stock and deregister its shares.

"We believe that Barington's lawsuit is completely without merit and designed to advance some secret Barington agenda not yet publicly admitted or disclosed," Marcy Syms stated in her letter.

Syms assured shareholders that the company will continue to provide them with information beyond May 31, 2009. The company had previously publicly committed to providing information through that date.

Marcy Syms reiterated that her family has no intention of taking the company private.

Barington called Marcy Syms' letter "disingenuous" and accused the CEO of trying to "impugn" the integrity and motives of the shareholder group.

Marcy Syms said Barington has "a well-deserved reputation as a disgruntled shareholder" and called the investor's actions "ill-advised" and "costly."

In her letter, Marcy Syms noted that Barington has sought to change the management or policies of about 25 companies and launched proxy contests to put its candidates on boards of directors at about 15 public companies all within the past 10 years.

It was previously reported that the shareholder group requested a copy of Syms' shareholder register and other related records in order to determine if Syms has 300 or more shareholders of record, either now or at any time prior to April 1, 2008.

On Jan. 2, the stockholder group asked the company's board to reconsider its decision to delist Syms stock.

Syms is a Secaucus, N.J.-based off-price retailer.

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