Donerail launches proxy fight at Turtle Beach, seeks to oust entire board

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NEW YORK, March 22 (Reuters) - Donerail Group is working with another asset manager to oust gaming equipment company Turtle Beach Corp's (HEAR.O) entire board and has nominated six directors to staunch a steady share price drop, the investment firm wrote to other shareholders.

Donerail formally launched a proxy fight and identified its six candidates, who have expertise in gaming, capital allocation and strategic transactions. It said it has a detailed operating plan to put Turtle Beach on par with rivals. The slate includes William Wyatt, who co-founded Donerail with Wes Calvert in 2018 after both spent years at activist firm Starboard Value.

Wyatt told investors his firm took "the extraordinary step" of trying to replace all directors because Turtle Beach's share price has tumbled some 60% since current management took over eight years ago. He also criticized Turtle Beach's capital allocation and corporate governance in the letter, which was seen by Reuters.

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"With the right leadership and strategy in place, we believe that Turtle Beach can be a growing industry powerhouse. Unfortunately, the Company currently has neither," the letter said.

A Turtle Beach spokesman was not immediately available for comment.

Trying to take control of a board is considered a very aggressive step, but a number of activist investors are trying it and some like Mantle Ridge have recently succeeded.

Donerail formed a group with investment advisory firm SCW Capital Management, and the two jointly own 8.5% of Turtle Beach, ranking them among the company's biggest shareholders.

The proxy contest marks the latest twist in a long-running saga after Donerail initially called on the maker of gaming headsets and controllers to put itself up for sale and then became a bidder, offering as much as $36.50. Reuters previously reported that Donerail abandoned the bid this month. read more

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Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler

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