Your vote is extremely important. Make an
Informed Choice.
The Special Committee Recommends that Synex
Shareholders Vote the WHITE Proxy
TSX: SXI
VANCOUVER, Oct. 10, 2017 /CNW/ - The Special Committee of
Synex International Inc. (the "Company" or "Synex")
today addresses the press release and proxy circular issued on
October 5, 2017 by Daniel Russell (the "Dissident" or
"Russell"), a dissident shareholder and a director of the
Company. The Special Committee consisting of independent directors
of Synex was formed to independently ensure that the best interests
of ALL shareholders are being considered.
"Mr. Russell has consistently impeded the growth of Synex and it
is unfortunate that instead of having constructive engagement with
the Special Committee, Mr. Russell has launched a costly battle to
advance his personal interests," said Clifford Grandison, Chair of the Special
Committee of independent directors.
Synex Shareholders should be aware of the following concerns
with regards to Daniel Russell and
his hand-picked nominees. The Special Committee believes in
shareholder democracy. As a shareholder you have the right to be
well informed. In response to the Dissident's Proxy Circular and
News Releases, the Special Committee urges you to take the
following information into careful consideration before casting
your vote.
THE DISSIDENT'S PURPORTED CLAIMS OF SUPPORT
Russell purports to represent the "concerned" shareholders and
have the "support" of approximately 42% of the issued and
outstanding shares. In fact, the "concerned" shareholders and
"support" represents only himself, his spouse and members of his
family.
THE DISSIDENT WANTS TO TAKE OVER SYNEX WITHOUT PAYING A
PREMIUM TO SHAREHOLDERS
Capital markets participants expect that an investor seeking to
take control of a company pay a premium. By attempting to install
his hand-picked slate of directors and take over the board, Russell
is trying to avoid paying shareholders a premium for control of
Synex.
THE DISSDENT'S HAND-PICKED SLATE: QUESTIONABLE RELEVANT
EXPERIENCE AND MAY NOT BE INDEPENDENT
The slate hand-picked by Russell raises a number of
concerns:
- Lack of Local Expertise. To the Special Committee's
knowledge, only one of the nominees appears to have any direct
connection to British Columbia,
the location of all of Synex's projects. This local expertise is
crucial for the Company's board.
- No Industry Experience. One nominee is a research
analyst at an international policy agency in Paris, France and appears to have no direct
experience relevant to independent power producers in British Columbia.
- No Public Company Experience. To the Special Committee's
knowledge, other than Russell and his spouse, none of the nominees
appear to have any recent experience with capital markets and
public company financing or indeed, any recent public company
experience in Canada or
elsewhere.
The Dissident's nominees include himself, his spouse and three
hand-picked nominees. The relationships between the Dissident and
his three hand-picked nominees are unknown. How can you be sure
that the Russell nominees to the board are truly independent and
will act in the best interests of the Company and not Daniel Russell? Perhaps he selected them due
to his expectation that they will be loyal to his suggestions.
Having control of the board amounts to having control of the
Company. Directors are appointed to represent a variety of views
and ideas, and it's difficult to be confident this will be the case
in a situation where all potential directors are nominated by a
single person, Russell. Will minority shareholders have a
say?
THE DISSIDENT HAS IMPEDED THE BOARD AND MANAGEMENT
Russell casts himself as being on the sidelines, powerless to
intercede. To the contrary, Russell is a director with the full
access that is provided to such persons. Russell has even thwarted
change or progress by the Company. Management has recently
presented to the board for evaluation, several business and
financing alternatives only to have each rejected by Russell, with
each rejection being backed with the threat of a proxy contest.
THE DISSIDENT DOES NOT HAVE A PLAN
The Dissident has aspirations, but fails to describe any plan
for the Company. In essence, it appears as though Russell wants to
'make Synex great again' and 'drain the swamp', but provides no
details, only bluster. After serving as a director of the Company
for over 13 years, it appears to the Special Committee and certain
members of the board that Russell may not understand the business
of the Company at a level required to run it or add significant
value. In his circular, Russell states "Additionally, management
continues to spend valuable cash resources on development
projects (McKelvie Hydro Project, Newcastle Hydro Project and
Victoria Lake Hydro Project) despite such projects being marred
(sic) in regulatory uncertainty in British Columbia." As a director of the
Company, Russell should be aware that the McKelvie Hydro Project
and Newcastle Hydro Project have acquired the necessary regulatory
approvals, including issuance of water licenses and land tenures.
These two projects, upon completion, represent an addition of 9MW
of installed capacity as compared to the existing installed
capacity of the Company of 12MW (net). Further, Russell
should be aware that the Company has entered into a Memorandum of
Understanding with a third party for the continued development of
the Victoria Lake Hydro Project, under which the Company does not
expect to invest additional cash. In recent strategic discussions,
Russell has not presented to the board any alternate strategic plan
to grow the Company. There is no reason to believe he will do so
now.
THE DISSIDENT HAS NO PLAN FOR THE COMPANY'S DAY-TO-DAY
LEADERSHIP
Russell has initiated a proxy contest without any plan for
day-to-day executive leadership. Indeed, Russell will not commit to
assuming any day-to-day senior leadership position himself,
although if successful with the proxy contest he may anoint himself
CEO with the salary that accompanies the position. Vague as
Russell's plans may be, how does Russell intend to implement his
plan without a full-time leader at the Company? Russell is long on
criticism and short on solutions.
THE DISSIDENT'S PROPOSED CHANGES IN MANAGEMENT COULD PLACE
THE COMPANY AT RISK
Synex is a small company of less than 15 employees. It has a
history of successfully designing, building and operating
medium-sized hydroelectric plants – a complex set of tasks that
require specialized and diverse skill sets. The Company's current
president is a practicing engineer who, together with senior
employees, intimately understands the technical and business
challenges in carrying out these tasks. Who will replace this
knowledge and experience if senior management and/or key personnel
leave or are replaced?
THE DISSIDENT'S HAND-PICKED SLATE MAY BURDEN SYNEX WITH
HIGHER COSTS
While purporting to be concerned about higher costs, a review of
the background of Russell's hand-picked slate suggests that the
following may occur:
- higher directors' fees;
- higher executive compensation;
- higher costs related to directors' meetings, including
transportation and hotel costs;
- Russell's costs for initiating this proxy contest;
In addition, it is likely that the Company will be burdened with
employment severance obligations and additional costs for hiring
replacement employees. Replacement employees could be
expected to require higher compensation. These costs may be
significant. These funds would be better spent on advancing the
business of the Company.
Management and the management nominees are qualified to
successfully lead Synex.
MANAGEMENT NOMINEES HAVE BROAD SUPPORT
To date, the management nominees have received and continue to
receive broad-based support from shareholders. These shareholders
represent a broad spectrum, not the narrow few of the Dissident and
his family members.
INDUSTRY CHALLENGES AND STRATEGIC PLANNING
Through its strategic planning process, the Company has
identified five main challenges that are being addressed going
forward. None of these challenges have an 'easy' solution.
Russell's purported 'plans' are superficial in nature and do not
address head-on the realities of running an independent power
producer in the current climate. In order to further address these
challenges going forward, the Special Committee will recommend that
the board appoint a Strategic Operations Committee, which will be
empowered to be responsible for considering and making
recommendations in regard to the Company's strategic direction and
planning with a view to enhancing corporate and shareholder
value.
MANAGEMENT NOMINEES ARE QUALIFIED AND HAVE RELEVANT
EXPERIENCE
The management nominees have experience which is directly
relevant to the business of a public company operating and
developing independent power projects in British Columbia:
- Strong Local Connections. All of the management nominees
(other than Tanya DeAngelis) are
based in British Columbia and have
a lengthy history of doing business in the province.
- Extensive Industry Experience. 4 of the 6 management
nominees have extensive experience with the construction industry
or with developing and operating independent power projects in
British Columbia.
- Public Company Experience. A majority of the management
nominees have Canadian public company experience and the related
governance expertise.
In addition, the management nominees include Tanya DeAngelis, who is the Dissident's spouse,
in recognition of the fact that Russell, as a large shareholder,
should have representation on the board and the access and
influence available to a director. The Special Committee will also
recommend that the board appoint an empowered Corporate Governance,
Nomination and Compensation Committee comprised of three
independent directors.
SPECIAL COMMITTEE MATTERS
The Special Committee also advises at this time that
Paul O'Sullivan has resigned as a
member of the Special Committee, and would like to thank Mr.
O'Sullivan for his contribution. Mr. O'Sullivan stated, "When
I agreed to serve on the Special Committee, I was hopeful a proxy
contest could be avoided. As I am not standing for
re-election, I am leaving the remaining members of the Special
Committee to guide the Company during this challenging
time. I'd like to acknowledge the ongoing commitment and
dedication of the Special Committee."
VOTE TO PROTECT YOUR INTEREST IN SYNEX
Annual General Meeting
The Annual General Meeting of Synex's shareholders is scheduled
for 10:00 a.m. (Vancouver time) on Friday, November 3, 2017 at the offices of Clark
Wilson LLP, 900 – 885 West Georgia Street, Vancouver, British Columbia.
The Special Committee Recommendations
Your vote is extremely important.
The Special Committee unanimously recommends that Synex
shareholders vote only the WHITE proxy or voting instruction form
FOR the management nominees.
Shareholders who have previously voted the Dissident's proxy or
voting instruction form and wish to support the management nominees
have the right to change their vote by simply voting the WHITE
proxy or voting instruction form.
For more information, Synex shareholders are encouraged to
access the Management Information Circular of Synex on its website
at www.synex.com or under Synex's profile at www.sedar.com.
VOTE TODAY. Time is of the essence and Synex shareholders
are urged to vote online by following the instructions found on the
WHITE proxy or voting instruction form to ensure votes are received
in a timely manner. Vote no later than the deadline of November 1, 2017 at 10:00
a.m. (Vancouver time).
SHAREHOLDER QUESTIONS
Questions or requests for assistance with voting may be
directed to Synex's proxy solicitor,
SOURCE Synex International Inc.