Charlotte Russe Holding receives takeover offer

The cash proposal from KarpReilly Capital Partners LP and H.I.G. Capital LLC offers between $9 and $9.50 per share for the clothing chain. Based on the company's 20.9 million outstanding shares, the deal is valued at up to $198.6 million.

"We believe that investors have lost confidence in the current direction of Charlotte Russe," KarpReilly partner Allan Karp, a former director of the chain, said in a statement Wednesday morning. "While we believe that this erosion can be reversed, we don't believe it will be without fundamental change, which will be very difficult to implement in the context of being a public company."

But hours later, the San Diego-based chain announced a slate of fashion industry veterans who will become the new chief executive, chief financial officer and chief merchandising officer. The company also said it would review the buyout offer from the firms.

"We would note that fundamental premise of the KarpReilly proposal, ... that Charlotte Russe has no permanent management team, was addressed by this afternoon's announcement," Chairwoman Jennifer Salopek said in a statement. "The board has also been developing a new strategic plan to address current issues at the company and is confident the new management team would be well positioned to reinvigorate growth and profitability."

Wednesday's bid came nearly a year after KarpReilly, which has amassed a 5.4 percent stake in Charlotte Russe stock, first tried to acquire the brand before being rebuffed by the board.

In August, the chain adopted a plan granting all stockholders of record on Aug. 25 rights to buy shares of a new series of preferred stock. A shareholder rights plan, or "poison pill" provision, usually makes a hostile takeover more difficult for the acquirer.

Charlotte Russe said the plan wasn't intended to prevent a takeover. However, the retailer has said it would deter an attempt to acquire the company if not approved by the company's board or shareholders.

The clothing company, which operates nearly 500 stores, is facing tough competition from chains like Forever 21 and has seen its same-store sales fall during the second half of the fiscal year as consumers scale back spending in an increasingly tough economy.

On Wednesday it fell far-short of Wall Street forecasts, reporting a loss of $6.6 million, or 32 cents per share, in the fiscal fourth quarter as charges associated with management changes and store impairment costs weighed down results.