- Urges shareholders to vote their BLUE proxy in favour of five
new and experienced nominees to replace entrenched incumbent
directors
- Outlines plan for change to create value for Synex
shareholders
- Announces significant support of over 46% of shares looking for
much needed change
VANCOUVER, Oct. 5, 2017 /CNW/ - Daniel Russell, a director and the single
largest shareholder of Synex International Inc. (TSX:SXI)
("Synex" or the "Company"), along with other
Concerned Shareholders, today announces that he has filed a
proxy circular (the "Circular") and letter to shareholders
in respect of the upcoming annual general meeting of Synex
scheduled for November 3, 2017 (the
"Meeting").
He stated: "Early momentum for our nominees continues to grow
with the support of now over 46% of the issued and outstanding
shares looking to bring much needed change to Synex with a
refreshed Board focused on profitability, asset utilisation and the
revaluation opportunity for our stock that positive changes will
avail."
The Concerned Shareholders have become aware of a press release
apparently issued by the Company's incumbent management on
October 4, 2017 referencing
confidential discussions between Daniel
Russell and the Special Committee of Synex and to the effect
that giving shareholders an opportunity for meaningful change
through a contested process is a costly distraction that could have
been avoided. The Concerned Shareholders are disappointed and
frustrated at the suggestion that resorting to shareholder
democracy is bad. The fact is that Daniel Russell and the Concerned Shareholders
decided to endorse an alternative, superior board slate only when
it became abundantly clear that the incumbent board lacks any
appreciation for the need for change. Indeed the incumbents'
October 4th press release reiterates
a firm commitment to the status quo that has resulted in sustained
underperformance.
It is time to put shareholders first and to let them decide for
themselves the future of the Company. A vote for management
is a vote for continued underperformance and corresponding
undervaluation of Synex stock. A vote with the Concerned
Shareholders is a vote for a new approach focused on you, the
shareholder, and the profitable, professional management of the
Company.
Shareholders are urged to read the circular and vote their BLUE
proxy or voting instruction form by 5:00
p.m. (PDT) on October 31,
2017. Shareholders with questions about voting their shares
should call Kingsdale Advisors at 1-866-581-0507 or 1-416-867-2272
outside of North America or email
contactus@kingsdaleadvisors.com. A copy of the information circular
is also available on Synex's SEDAR profile at www.sedar.com.
Full text of the letter below:
October 3, 2017
Dear Fellow Shareholder,
As concerned shareholders of Synex International Inc., we are
asking for your vote at the Company's annual general meeting
scheduled to be held on Friday, November 3,
2017 at 10:00 A.M. (Pacific Daylight
Time) at the offices of Clark Wilson LLP, 900 – 885 West
Georgia Street, Vancouver, British
Columbia V6C 3H1, and at any and all adjournments or
postponements thereof. Now is the time to make a change. Your vote
will decide the future of the Company and your investment.
Daniel Russell and other
concerned shareholders (the "Concerned Shareholders") hold
an aggregate of approximately 42.16% of the common shares
("Shares") of the Company. We have significant skin in the
game and have willingly participated in numerous equity raises
because we believe in the true intrinsic value of the Company.
However, we have seen our investment poorly managed by an
ineffective President, Gregory
Sunell, and a stagnant board of directors of the Company
(the "board") that panders to his demands. As shareholders,
we are furious and you should be too. We will remind you of the
following key facts that highlight the glaring need for immediate
change:
- When challenged by Daniel
Russell over critical strategic business matters, the
President's immediate reaction was to appoint a friendly director
and nominate another to the board in order to insulate himself from
scrutiny in a desperate act of entrenchment. The President,
together with another director, also exercised options to increase
the number of votes they would have at the Meeting, while denying
that same opportunity to Mr. Russell and another optionholder.
- The President is resistant to change, out of touch with current
business realities and the legitimate interests of ordinary
shareholders.
- After 25+ years of working for the Company, the President has
become complacent and indifferent to shareholders.
- Under the President's watch, the Company has underperformed the
S&P/TSX Composite Index on a 1, 3 and 5-year basis. The
President has been entrusted with over $33MM in assets and yet
after 16 years as President, has been barely able to turn a profit.
This lack of ability to manage the Company has led to massive
dilution with each successive equity raise being used to simply
maintain the status quo and his own lifestyle.
- Despite its enviable land interests, the Company has only three
power plant assets under its control.
The Concerned Shareholders have repeatedly attempted to work
constructively with the board and the Special Committee formed when
they raised the need for change. It is clear from discussions
that the board is not open to making the necessary changes and
instead, prefers to maintain the status quo that has proved
destructive for many years. The Concerned Shareholders have now
been left with no choice but to protect the interests of fellow
shareholders.
With your help, we will achieve a result at the Meeting which
will serve the interests of all shareholders by reconstituting the
board with the following five highly qualified nominees:
Daniel J. Russell, Tanya L. DeAngelis, David Schincariol, Cecilia Tam and Richard
McGivern. Each of our nominees have the requisite
experience, expertise, perspective and motivation to maximize the
Company's true potential value.
The current President and key members of management act as
though the Company exists to underwrite their lifestyles. Our
nominees understand that the board is there to represent
shareholders' interests and that management serves at the pleasure
of the board. This major disconnect in shareholder focus is the
reason we need wholesale changes to the board and not mere
window-dressing. The focus going forward will be on you, the
shareholder. This Meeting is your last opportunity to end this
madness and to bring a change in leadership that will protect and
enhance the value of your investment. Only your vote, no matter how
many Shares you own, can reconstitute the board. Our nominees have
a strategic plan and it needs to be implemented now:
- We will deal with the very real strategic, balance sheet, risk
management and profitability issues we are facing; issues that the
current President either denies exist or is unable to handle;
- We will assess every aspect of our business against industry
consistent processes and key performance indicators and either
devise a plan to improve contribution or scale back to a business
consistent level;
- We will streamline every bloated area of the Company, starting
with the board and management. We will drastically reduce overhead
to increase cashflow and profitability;
- We will critically analyze operations to determine if all
assets are fully utilized and accretive;
- We will look for opportunities to fully extract value from our
asset base;
- We will evaluate the reinstatement of shareholder dividends in
line with increased cashflow and profitability;
- We will engage with you, our shareholders, be open to your
input and be transparent with you, providing ongoing updates on our
progress to turn the Company around; and
- Our nominees will bring much needed skills, energy, independent
thought and critical thinking to the board and will implement much
needed governance and transparency.
We have great confidence that you will judge current management
and certain members of the board by their track record of abysmal
performance, inadequate disclosure and atrocious corporate
governance standards. We invite you to join us on a path to a
brighter future.
The time has come to provide the Company with the direction and
leadership it requires through a new shareholder-focused board. We
are committed to bringing passion and purpose back into the Company
and delivering strong shareholder returns in an ethical and
environmentally sound way. EVERY VOTE WILL COUNT AND YOU MUST
TAKE ACTION. This is the last chance to preserve and build
value in the Company. After this Meeting, it will be too late.
Sincerely,
Daniel Russell
Director & Shareholder, Synex International Inc.
Advisors
Daniel Russell has retained Dentons Canada LLP as legal
counsel, and Kingsdale Advisors as his strategic shareholder
advisor and proxy solicitation agent.
ADDITIONAL INFORMATION
This news release is also issued pursuant to the early warning
requirements under applicable Canadian securities laws.
Daniel Russell, Tanya DeAngelis, Russell Family Holdings Inc.
and Joan Arietta Russell
(collectively, the "Concerned Shareholders") may be
considered to be acting jointly or in concert with each other as a
result of such shareholders having an agreement, commitment or
understanding to exercise jointly voting rights in connection with
their Common Shares, such agreement, commitment or understanding
having occurred on September 29,
2017. Mr. Russell, Tanya
DeAngelis, Russell Family Holdings Inc. and Joan Arietta Russell own or control 11,979,000,
1,028,000, 1,935,500 and 330,000 Common Shares, respectively, and
the Concerned Shareholders, as a group, own an aggregate of
15,272,500 Common Shares, representing approximately 43.96% of the
current outstanding Common Shares. A copy of the early warning
report to which this news relates will be available under the
Company's SEDAR profile at www.sedar.com. For further
information or to obtain a copy of the early warning report in
connection with this news release after it has been filed, please
contact Daniel Russell at 64
Dalkeith Drive, Brantford, Ontario
N3P 1N6.
Except where otherwise stated herein, the statements contained
in this press release are not made by or on behalf of the
management of the Company but are made by or on behalf of the
Concerned Shareholders. Information concerning the business
of the Concerned Shareholders to be considered at the Meeting is
contained in the Circular. The Circular is available for review on
the Company's SEDAR profile at www.sedar.com.
The Company's head office is 400 - 1444 Alberni Street,
Vancouver, British Columbia,
Canada, V6G 2Z4. A copy of this press release may be obtained on
the Company's SEDAR profile at www.sedar.com.
SOURCE Daniel Russell