Saturday, July 13, 2024

Culp strikes agreement with second-largest investor

High Point’s Culp, which makes mattress fabrics and other bedding products, has reached an agreement with its second-largest investor and will expand its board of directors as a result.

In a Form 8-K filed Monday, the company said the cooperation agreement will result in Alexander B. Jones joining the board. Jones will be appointed to the audit committee and the compensation committee of the board.

The investor group in question is 22NW, a Seattle-based hedge fund that focuses on small-cap stocks that it believes are undervalued. Jones is a vice president and senior research analyst at 22NW where he oversees the firm’s investments in the industrials, materials, and consumer sectors.

“Our interactions with Alex and 22NW have been constructive over the years, and as we execute our recently announced restructuring plan, we are pleased to have Alex’s perspectives and insights as a board member,” said Culp Chairman Franklin Saxon in a statement.

Last month, Culp announced a restructuring plan aimed at cutting more than $10 million in costs that also included selling some of its real estate. The company said it would close its manufacturing plant in Quebec, Canada, and move knitting and finishing capacity from this plant to its facility in Stokesdale, North Carolina.

The investor group has agreed to certain standstill provisions in which it can not expand it ownership to more than 15% of Culp’s stock. The standstill provisions also include restrictions with respect to nominating or recommending for nomination any board members, making any shareholder proposal to the company or the board, and soliciting shareholder votes in opposition to any board recommendation or proposal.

The agreement also contains confidentiality and non-disparagement clauses, and Culp has agreed to reimburse the investor group an amount not to exceed $15,000.

Culp closed Monday at $4.31, up 2 cents. Its 52-week high is $5.99. The company was founded in 1972 by Robert G. Culp Jr., and is one of the largest marketers of upholstery fabrics for furniture in North America.

22NW owned 1.2 million shares of Culp, or just less than 10% of the outstanding stock, at the end of the first quarter. It began buying Culp shares in 2020.

Another investor, Chicago-based Gate City Capital Management, owns 1.3 million shares, or 10.4% of Culp, and is the largest shareholder.

Chris Roush
Chris Roush
Chris Roush is executive editor of Business North Carolina. He can be reached at

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