NEW YORK, June 19, 2015 /PRNewswire/ -- If you see
great upside in Dynacor's mill and mining businesses but recognize
the Board's lack of alignment, help deliver the message that you
desire a more shareholder-friendly Board with oversight by
independent Directors who are aligned via meaningful share
ownership, and VOTE THE BLUE PROXY CARD by the voting deadline of
5:00 p.m. EDT today.
Dear Fellow Shareholders,
In its press release dated June 18,
2015, Dynacor Gold Mines Inc.'s (TSX: DNG)(OTC: DNGDF)
("Dynacor" or the "Company") Board continued its campaign of
putting forth misleading information and false claims in an effort
to disguise the fact that the Board needs change. Previously,
the Board's false claims about Red
Oak seeking control of the Board, including to shut down
Tumipampa, were easily and publicly disproven when we challenged
Dynacor's Board and offered NO Red
Oak affiliated nominees in exchange for the Board adding
one nominee from a large shareholder (who the Board and CEO
have known longer than any other) and adopting the same governance
improvements which the Board has now claimed are already being
adopted. The Board exposed its true agenda and said no,
instead choosing to spend an estimated $300,000-500,000 of shareholder (not insider,
since insider ownership is negligible) monies on a costly proxy
contest aimed at entrenching themselves. In a continuation of
what has become a shameless campaign, the Board has concocted new
theories, this time stating that Red
Oak had knowledge of the Board's alleged efforts to improve
its governance policies. Just like the prior baseless claims,
these too are easily disproven by reading the same press release in
which Dynacor makes such nonsensical allegations.
Specifically, within its release the Board states that its "New
Governance Charter and Policy" covers "director independence and
tenure issues." Later in the same press release, the Board
confirms the exact opposite –that "the Corporation has
not adopted director term limits at this time."
Additionally, Dynacor does not share that the Director most
impacted by the adoption of standard tenure-based policies is the
non-independent Chairman, Rene
Branchaud, who via 18 years at Malaga (Dynacor's now
bankrupt predecessor) and at Dynacor would clearly not pass any
tenure-based policies. Mr. Branchaud, as a reminder and as
confirmed by ISS (the same advisory firm which Dynacor relied on
for support of its Directors in its June
11 press release), is not independent.
Thus, in the Board's desperation to say whatever it can to win
shareholders support, it states that its new policies address
tenure and independence only to clearly confirm the exact
opposite. This is both disingenuous and misleading, and we'd
rather Dynacor just openly confirm that it does not support such
governance policies rather than play such games. Dynacor's Board
knows that our only "plan" for the Company is to improve its
corporate governance practices to such that the Board is properly
aligned with shareholders. Of course, because this Board is
not aligned, this "plan" appears to be its worst fear and the Board
appears willing to say literally anything it can to avoid this
outcome.
Dynacor's Board Dodges ISS Concerns
In an effort to be transparent, we would further note that Dynacor
continues its unwillingness to address the ISS concerns about its
governance which we were forced to disclose because Dynacor's Board
would not. Such concerns include the Chairman's
affiliated/non-independent status (versus the independent status
the Company falsely represents), yet another AGAINST recommendation
regarding insider driven and self-serving compensation proposals,
and that ISS would normally recommend AGAINST the election
of both the Chairman and CEO given the lack of a nominating
committee (yes, ISS cites the same concerns we have, yet Dynacor
knowingly omitted mention of this in any shape or form and across
multiple press releases). Dynacor's non-independent
Chairman-led Board also failed to address the Chairman's singular
control of nominations – a practice we have frankly never seen
before, and are shocked to see supported by a Chairman who is a
securities attorney himself.
Dynacor's Misleading Statements About Shareholder Support
As confirmation of its lack of understanding about shareholder
representation and alignment, Dynacor's Board claims it has
received over 97% shareholder support. The Board's lack of
understanding here is comical, as Dynacor has already publicly
disclosed that it only reached out to a negligible 6 out of 36
million votes at last year's annual meeting for Director
elections. How in the world can Dynacor's Board believe that
it is aligned and has achieved majority shareholder support when it
barely achieved any feedback and didn't make the effort to seek out
more?? In a 19 year professional investing career, I have
never seen a Company communicate with so little of its share base,
let alone then promote that outcome. Rather than alignment,
this reflects complacency and "bare minimum" effort by a Board now
caught with its hand in the cookie jar and forced to prove its
alignment with its shareholders. Of course, given this Board
has chosen to waste significant shareholder funds rather than add a
single non-Red Oak nominee and adopt
governance policies which it now claims it plans to anyway, what
else can we expect? None of this smells right to us, and we
know fellow shareholders agree.
Does Dynacor's Board Not Want U.S. Investors?
In its communications, Dynacor continues to refer to Red Oak as "a US hedge fund based in NYC" in
what we infer as a form of disparagement. In fact, we have
heard from other shareholders that they have referenced us in such
a negative way. We are both confused and dismayed by such
statements. Yes, we understand you have been exposed and
challenged by us and that there is desperation on your part to "win
at all costs," as indicated by your plethora of baseless and ever
evolving allegations. However, in what scenario does it make
sense to convey that U.S. or institutional investors may be a bad
thing for the Company, particularly from one of the very few
publicly traded microcap companies which employ a full time
investor relations individual, presumably as part of an effort to
attract investors and money flow into the stock, and to increase
liquidity as well as the share price? We take exception to
these comments and references and view them to be in extremely poor
taste.
We Repeat - Red Oak Is Going
Nowhere
As we stated in our June
17th press release, we are not going anywhere and
will continue to fight for best practices and strong governance and
alignment. We bought Dynacor shares last week, and we
continued buying shares this week. Perhaps insiders might
stop selling and instead join us, as proper alignment is more than
just words. As the Founder and Managing Member of
Red Oak, I have not personally
called nor solicited a single investor as part of this
contest. I have received numerous inbound calls and have
instructed our solicitors to meet the minimum legal requirements on
general solicitations so as to ensure our concerns are
shared. Our spend in this effort, which we have been happy to
pay for as part of our overall investment in the Company, has been
made to get out this important message and to promote alignment and
best practices which we all – as shareholders – deserve, and only
after this misaligned Board made clear its intent to entrench
itself at all costs rather than allow shareholders (who Directors
are obligated to represent) to have even a single voice on the
Board. Governance, alignment, and shareholder representation
do matter because the greatest risk which we as shareholders
face is not in the exciting businesses which exist at Dynacor, but
rather in this Board which has not acted in alignment with
shareholders. Until this changes, we as shareholders continue
to take on this unnecessary risk. With Dynacor's potential
value so high, now is precisely the time to begin eliminating this
risk to our collective investment. Accordingly, we will
continue to fight for the interests of all shareholders. We
intend to send a representative to the annual meeting. We
will actively monitor the Board in its growing up process. We
will continue to seek long overdue Chairman rotation and best
practices. And we will continue to push for shareholder
representation on the Board, whether from us, from other large and
informed shareholders, or ideally a combination from several
holders so that varied yet real representation and balance does
exist.
Please support us as we fight for the interests of all
shareholders and:
VOTE THE BLUE PROXY CARD BY 5:00 P.M. TODAY
If you have questions or require assistance, please contact our
proxy solicitor, InvestorCom, Inc.:
Telephone: (203) 972-9300
Toll Free: (877) 972-0090
E-mail: info@investor-com.com
Outside of North America, Banks
and Brokers: (203) 972-9300
Sincerely,
David Sandberg
Managing Member
Red Oak Partners, LLC
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/red-oak-addresses-yet-another-misleading-press-release-by-dynacors-entrenched-board-300101957.html
SOURCE Red Oak Partners, LLC
