Parlux postmortem?

August 29, 2007

images9.jpgWhile it might be a bit premature to call the time of death on Parlux Fragrances (PARL), the proxy Parlux filed late yesterday reads like a set of grisly autopsy records. Parlux has been embroiled in controversy for over a year now, as plans for former CEO Ilia Lekach to take the company private have come together and fallen apart more than once. Called the “Worst CEO of 2006” by Herb Greenberg, Lekach has become more known for his failures than his accomplishments.

Getting back to the proxy, in the “Certain Transactions” section (which stretches on for almost three pages), we get the gritty details of how activist shareholder Glenn Nussdorf had to wrest control of Parlux from Lekach with a threatened proxy contest and solicitation. The battle finally ended in February of this year:

[P]ursuant to a settlement agreement between Nussdorf, Ilia Lekach and the Company, Nussdorf terminated his solicitation of consents from Parlux stockholders to replace Parlux’s directors, and Parlux dismissed its lawsuit against Mr. Nussdorf, his nominees and certain Nussdorf-controlled companies. The parties’ settlement provided for the immediate resignation from the Parlux Board of Ilia Lekach.

Lekach may have walked away licking his wounds, but as the proxy notes, his consolation prize was a soothing $2.4 million and 500,000 in-the-money warrants underlying PARL stock. For his part, Nussdorf received $1 million as reimbursement for legal expenses and the driver’s seat at Parlux. Shareholders, however, were left with nothing but a stinking corpse. Shares of Parlux, which traded at nearly $20 (post-split) in February 2006, closed yesterday at just $3.57.

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