Charles & Colvard, Ltd. said that George R. Cattermole, the current director of the moissanite manufacturer and marketer, has been elected chairman of the board of directors, effective Feb. 3, in one of several upper management changes.
Charles & Colvard, also announced it has named Richard A. Bird (pictured), a current director of the Morrisville-based company, as its new chief executive officer.
In addition, the company has ended its employment relationships with three executive officers: Dennis M. Reed, president and chief marketing officer; Carl A. Mielke, senior vice president of Sales; and Steven Abate, vice president of Operations.
The company has entered into a Management Services Agreement with Bird Capital Group, Inc., effective Feb. 3, under which Bird Capital Group will provide management services to Charles & Colvard, including the services of Richard A. Bird as CEO.
The management services being provided by Bird Capital Group under the agreement are intended to initiate and lead a turnaround of Charles & Colvard’s business with the goals of increasing sales, reducing operational costs, improving marketing of Charles & Colvard’s products, and increasing shareholder value for the Company’s shareholders.
“We are in extraordinarily challenging times that require difficult decisions, innovative solutions, and aggressive, unprecedented actions,” Cattermole said. “For the past eight months our Board of Directors has identified, evaluated, and debated a variety of different business models and strategies that would put our company back on a growth path towards realizing our economic potential. We are confident that we have made the right choice and look forward to working with Mr. Bird, our employees, and Bird Capital Group to provide unique value to our customers, partners, and shareholders.”
Mr. Bird added, “The company’s business position has been severely weakened over the last two years, and the company’s marketing positioning of its products and resulting market penetration have obviously been unsuccessful, as shareholders are painfully aware. But, as both a shareholder myself and a consumer of the company’s products for several years, I continue to be enthusiastic about the potential for the company and its shareholders. Since becoming a director in May of 2008, I have become more aware of the need for dramatic change in the management of the Company and in the marketing of its products. I am committing myself to working substantively and diligently for improved shareholder value.”
The Management Services Agreement provides for monthly fees and potential short-term and long-term incentive bonus payments to Bird Capital Group, Charles & Colvard said in its statement. Monthly management fees initially are $75,000 per month subject to certain adjustments, except for the first two months in which fees are $175,000 per month while Bird Capital Group is responsible for developing a new strategic plan. Possible short-term contingent performance bonuses include a one-time bonus based on realized gross profit from certain potential finished goods inventory reductions before Feb. 1, 2010 and a possible bonus based on any net amounts realized upon any potential settlement of certain pending litigation. Possible long-term contingent performance bonuses include a bonus of twenty percent of adjusted operating income before interest, income taxes, depreciation and amortization, any long-term bonus payments under the agreement and certain extraordinary and nonrecurring items. Also, upon a sale of the company or termination of the agreement, a one-time bonus would be payable in an amount equal to twenty percent of the amount by which the company’s total market valuation exceeds the aompany’s valuation as of the date of the agreement.