(Adds details on agreement, background on ClubCorp)
By Carl O'Donnell and Michael Flaherty
May 9 ClubCorp Holdings Inc is in
advanced talks with activist investor FrontFour Capital Group
LLC over a deal that would give it two directors on the U.S.
golf club operator's board, according to people familiar with
FrontFour, which owns around 3 percent of ClubCorp's stock,
has put public pressure on the company since September to turn
around its performance.
As part of the deal with FrontFour, ClubCorp will expand its
board to 10 directors from eight, adding one independent
director to the company's slate for the next two years, people
familiar with the matter said.
Under the accord, FrontFour and ClubCorp must agree on the
individuals named to fill the new director seats.
ClubCorp has a staggered board, meaning only three directors
are up for election this year. One of the mutually agreed upon
directors will be added to that slate, and the other added to
next year's, one of the sources said.
Reuters could not confirm names of new directors that
FrontFour and the company have agreed to add to the board.
The sources asked not to be identified because the
deliberations are confidential. ClubCorp and FrontFour did not
immediately respond to requests for comment.
ClubCorp has not filed its proxy materials, and no annual
shareholders meeting date has been scheduled.
The agreement could be finalized in the coming days,
although there is always a possibility that the talks could end
unsuccessfully, the sources added.
Dallas-based ClubCorp, with a market value of $841 million,
announced in April that its chief executive, Eric Affeldt, was
stepping down, releasing the news on the same day it decided not
to pursue strategic alternatives after a three-month process.
Last year, FrontFour published a letter highlighting
ClubCorp's low valuation compared with leisure industry peers
such as Six Flags Entertainment Corp. ClubCorp's stock
has dipped from $14 to $12.90 per share since September, while
Six Flags has risen 30 percent to $62.72 in the same period.
FrontFour at the time also questioned some of its business
decisions, such as ClubCorp's model to pour money into
refurbishing its golf course acquisitions.
ClubCorp, founded in 1957, operates more than 200
properties, including golf and country clubs, business clubs and
sports clubs across the United States, Mexico and China.
FrontFour, based in Greenwich, Conn., was co-founded by
David Lorber, who previously served as a director at hedge fund
(Reporting by Carl O'Donnell and Michael Flaherty; additional
reporting by Greg Roumeliotis in New York; Editing by Steve
Orlofsky and Cynthia Osterman)