UPDATE 1-Browning West pursues five seats on Gildan's board as dispute over CEO ouster heats up

(Adds Gildan comment in paragraph 5, shares in paragraph 8)

Dec 29 (Reuters) - U.S.-based activist fund Browning West said on Friday it was seeking five seats on Canadian apparel maker Gildan Activewear's board, the latest development following the sudden ouster of its co-founder and former CEO.

Browning West, which owns about 5% of Gildan's outstanding shares, said in a letter to shareholders it wanted to remove five incumbent directors from Gildan's board and replace them with its own candidates, including former CEO of equipment rental firm United Rentals and former CFO of discount store operator Dollarama.

Glenn Chamandy was removed as Gildan's CEO earlier this month. The board asked Chamandy to leave the company he co-founded, without giving a specific reason.

Browning West said if its candidates are elected, the reconstituted board would focus on bringing back Chamandy as CEO and terminate the appointment of new Chief Executive Vince Tyra.

"The Gildan Activewear board stands behind its considered decision to relieve Glenn Chamandy as CEO and to appoint Vince Tyra as the new CEO," a Gildan spokesperson said.

This is a rare public spat in Canada between board and shareholders over a sudden ouster of a CEO.

Last week, Gildan backed its decision, after some big shareholders, including Browning West and Oakcliff Capital called for his return.

Toronto-listed shares of the apparel maker have lost over a tenth of their value since the company announced the departure of Chamandy. Until then, they had climbed 34% this year. Gildan has a market capitalization of C$7.55 billion ($5.70 billion), according to LSEG data.

"Board has ignored the independent feedback of nine separate investors who collectively hold more than 35% of Gildan's outstanding shares," Browning West said in the letter on Friday.

The activist fund previously sent a letter to Gildan's board on Dec. 20 saying it was prepared to reconstitute the board through a special shareholders meeting if the company continued to ignore shareholder feedback. ($1 = 1.3245 Canadian dollars) (Reporting by Granth Vanaik in Bengaluru; Additional reporting by Niket Nishant; Editing by Shounak Dasgupta)