Charlotte Russe Rebuffs Buyout Offer

KarpReilly Capital Partners and HIG Capital been rebuffed in their offer to buy women’s apparel retailer Charlotte Russe Holding Inc. (Nasdaq: CHIC), for between $9 and $9.50 per share. The deal could have been worth upwards of $198.6 million. KarpReilly currently holds a 5.4% stake in Charlotte Russe.


Charlotte Russe Holding, Inc. (Nasdaq: CHIC) today sent the following letter to KarpReilly Capital Partners, L.P. (“KarpReilly”) and H.I.G. Capital, LLC (“H.I.G.”) in response to their unsolicited proposal, which was received on November 12, 2008.


November 19, 2008 Mr. Alan W. Karp


KarpReilly Capital Partners, L.P.

104 Field Point Road

Greenwich, CT 06830

Mr. Timothy B. Armstrong

Managing Director

H.I.G. Capital Partners, LLC

1001 Brickell Bay Drive

27th Floor

Miami, FL 33131


Dear Messrs. Karp and Armstrong: After careful review and in consultation with our legal and financial advisors, our Board of Directors has unanimously determined that your unsolicited proposal of November 12, 2008, is definitively not in the best interests of Charlotte Russe’s shareholders. Your 13D filing of November 18, 2008, in which you acknowledge that you could propose an even lower valuation than was proposed in your November 12 letter, makes it clear to the Board that it is not in the best interest of shareholders to enter into discussions with you.


Last year, in response to the deterioration of certain business metrics, the Board initiated a comprehensive year-long review of strategy and operations and determined — with the assistance of experienced third-party retail consultants — that significant changes were necessary to improve operational performance and build greater value for our shareholders. Based on this review, the Board moved aggressively to develop a strategic plan that would transform Charlotte Russe into a high-performing, top-tier specialty retailer, and assembled a new management team to pursue this goal.


Since late July of this year, the Company, under Interim CEO Len Mogil, has moved quickly to address a number of operational, merchandising and inventory performance issues and establish the necessary foundation for a new start in 2009.


On November 12, we announced the completion of an extensive search process and the hiring of a new leadership team that has the full confidence of the Board. It is a team with extensive industry experience who is committed to transparency, fact-based decisions and the use of appropriate performance metrics. It is a team that shares our commitment to delivering value to our shareholders. In the coming months, there will be meaningful change at Charlotte Russe, especially in the five key areas we discussed on our November 12 call: brand positioning, merchandising assortment, inventory management, real estate strategy and capital utilization. Your opportunistic proposal — coming as it does in the early stages of this Board initiated transformation, and amidst unprecedented general macroeconomic turmoil — attempts to take advantage of current market conditions and would undermine the long-term shareholder value that this Board and management team is committed to building. We firmly believe that executing on our plan is the best and right course for our shareholders.


As a board and as individual directors, we understand our fiduciary obligations extremely well. We also recognize that the retail industry in general will be under some pressure in the near term. But we strongly believe that we have the right plan and the right people to make Charlotte Russe succeed.



By: /s/ Jennifer Salopek

Jennifer Salopek

Chairman of the Board of Directors

Charlotte Russe Holding, Inc.


About Charlotte Russe


Charlotte Russe Holding, Inc. is a mall-based specialty retailer of fashionable, value-priced apparel and accessories targeting young women in their teens and twenties. As of September 27, 2008, the Company operated 487 stores in 45 states and Puerto Rico. For more information about the Company, please visit