February 23, 2017 / 3:20 PM / 10 months ago

Engaged Capital seeks Rent-A-Center board change in push for company's sale

(Reuters) - Activist investment fund Engaged Capital LLC on Thursday nominated five members for election to Rent-A-Center Inc’s board, stepping up its efforts to push the furniture retailer to sell itself.

Engaged Capital, which has a 12.9 percent stake in Rent-A- Center, last week urged the retailer to explore strategic alternatives, to which the company responded by saying it was looking at strategies to cut costs and boost revenue.

Engaged Capital said on Thursday it was “unacceptable” that Rent-A-Center’s seven-member board was “stubbornly” pursuing a “risky public turnaround” strategy when other options were available.

The activist fund also warned that the board could be acting based on “personal loyalty” to chairman and interim chief executive, Mark Speese, and expressed concern the board could take actions that would harm shareholders.

Rent-A-Center, whose shares were up 2.6 percent at $8.62 in late morning trading, was not immediately available for comment.

Speese owns a 2.3 percent stake in the company, according to Engaged Capital.

The fund said its nominees include Christopher Hetrick, its former director of research; Mitchell Fadel, Rent-A-Center’s former president and chief operating officer; and Jeffrey Brown, founder and chief executive of asset management firm Brown Equity Partners LLC.

The other nominees are Carol McFate, who most recently served as the chief investment officer of Xerox Corp, and William Butler, former COO of rent-to-own furniture retailer Aaron’s Inc.

Reporting by Gayathree Ganesan in Bengaluru; Editing by Savio D'Souza

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