Regis’ Big New Stakeholder Doesn’t Seek to Run Co.

Birch Run Capital, which recently acquired 8.3 percent of Regis' stock, is "an active investor, not an activist investor," Regis Senior Vice President of Finance Mark Fosland told the Star Tribune.

A little-known New York-based investment firm that recently became Regis Corporation's second-largest shareholder isn't looking to actively run the Edina-based hair-care operator, according to a Star Tribune report.

Birch Run Capital bought 4.8 million of Regis' shares, or 8.3 percent of the company's stock, in late January. But unlike Starboard Value LP-which won three board seats in October after a contentious proxy battle with Regis-Birch Run isn't looking to directly run the business.

“They are an active investor, not an activist investor,” Regis Senior Vice President of Finance Mark Fosland told the Minneapolis newspaper. “They are just another investor who likes our business, our growth model, our management team. They have been talking to us for a while now. They did a lot of research” on Regis.

Birch Run Chief Operating Officer Karen Aberamovich declined to provide a comment to the Star Tribune. And Fosland told the newspaper that he couldn't comment specifically on the firm's investment strategy except to say: “Why would anyone invest? To make money.”

Minneapolis-based Regis has struggled and trimmed expenses in recent years as consumers have reduced the frequency of their salon visits amid the recession. Its net income dropped more than 79 percent in the fiscal year that ended in June 2011, and it reported a net loss totaling $8.9 million. Revenue, meanwhile, fell about 1.4 percent to $2.32 billion during the period-an improvement from a 3 percent drop the previous year.

In January, Regis said that it would lay off 110 corporate employees. Then last month, the company announced plans to eliminate at least half of its 50 store brands in an effort to reduce costs and simplify its business.

Birch Run was formed in 2006 and at the time hoped to raise $300 million. In 2009, the firm reportedly paid $2.25 million to acquire stock in Energy Partners-a Houston-based natural gas producer that had filed for Chapter 11 bankruptcy-and successfully rallied investors to oppose the company's reorganization plan.

To read the full Star Tribune report about Birch Run's intentions as a stakeholder, click here.

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