Angelica, Pirate Capital agreement ends proxy battle

By Lisa Kerner

Charlotte, N.C., Sept. 25 - An agreement between Angelica Corp. and Pirate Capital LLC has spared the company a costly election contest, according to a company statement issued on Tuesday.

Pirate Capital and its affiliates agreed to withdraw their proxy solicitation for the election of two nominees to Angelica's board of directors and will not nominate or solicit proxies for any other person for election to the board at Angelica's 2007 annual meeting.

Angelica said it can now turn its full attention to implementing its strategic plan. The company recently authorized Morgan Joseph & Co. Inc. to seek a sale of the company. Angelica is also planning to separate the chairman of the board and chief executive officer positions.

On Sept. 10, Pirate Capital urged Angelica shareholders to elect Thomas R. Hudson, Jr., founder and manager of Pirate Capital, and Pirate Capital's general counsel and chief compliance officer Christopher Kelly to the company's board on Oct. 30 citing Angelica's "dismal operating results" as a sign that change is needed.

In an open letter to fellow shareholders, the 9.8% shareholder said, "In our opinion, Angelica's current management team has continually fallen short of its stated projections and goals." Pirate Capital also noted the company's second-quarter losses of $1.45 million, compared with $715,000 for the second quarter of 2006, as well as CEO Stephen M. O'Hara's failure to deliver on "lofty prognostications."

Pirate Capital had also questioned Angelica's board about the re-engagement of Morgan Joseph as Angelica's strategic adviser. According to Pirate Capital, Morgan Joseph has been leading Angelica's "recent failing corporate initiatives."

Angelica is a Chesterfield, Mo.-based provider of textile rental and linen management services principally to the health care industry.

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