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Prentice Capital Continues Scuffle With Bebe

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Bebe Stores

One of Bebe’s biggest shareholders has voiced its concerns yet again.

Prentice Capital Management, the Michael Zimmerman-owned investment firm based in Greenwich, Connecticut, on Wednesday demanded to see Bebe’s stockholder lists and ledgers pursuant to Section 1600 of the California Corporations Code.

The reason: because board member Seth Johnson was recently named to the board of Christopher & Banks Corporation, a Minnesota-based retailer of women’s apparel and accessories.

“We would expect that Mr. Johnson fully disclosed his intentions to the company’s board of directors and corporate governance committee sufficiently in advance of his consent to be nominated and elected as a director of CBC, and that the company carefully considered and reviewed the possibility of future conflicts of interest and overlapping corporate opportunities,” Prentice Capital said in a letter to the board. “At a minimum, we trust that confidentiality, recusal and other appropriate screening wall procedures—at both companies—will be established to address and prevent any such conflicts of interest or the appearance of any impropriety.”

That’s why Prentice is exercising its “absolute and unqualified right” to inspect and copy Bebe’s record of shareholders’ names, addresses and shareholdings in order to probe for any other potential conflicts of interest. If the board fails to provide the specified records within five business days of receiving the demand, the California Corporation Code permits an order compelling their inspection.

Prentice, which recently disclosed a 5.6% stake in Bebe, has been a very vocal thorn in the side of the retailer’s board of directors for the last several weeks. In early March, the firm sent a letter criticizing the board’s “utter lack of consideration for and communication with its broader investor base” and called CEO Manny Mashouf’s compensation package “wildly off-market and utterly inappropriate.”

Mashouf, who founded the company and returned to the role of chief executive in February, recently responded with his own letter, explaining that if the firm would sign a non-disclosure agreement, he would answer all questions.

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