Urges shareholders to vote their BLUE
proxy in favour of five new and experienced nominees to replace
entrenched incumbent directors, who have resorted to mudslinging
tactics
VANCOUVER, Oct. 12, 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 released an open letter to Synex
shareholders warning them of the latest innuendo and misleading
tactics used by the Special Committee of Synex to induce fear among
shareholders. The letter addresses and sets the record straight
regarding several matters pertaining to Mr. Russell and the
Concerned Shareholders' slate and thanks all shareholders for their
continued support and input leading up to the meeting date.
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. Shareholders should keep asking two
simple questions:
- if they knew what to do, why haven't they done it? and
- if any of their claims were true, wouldn't the stock be trading
at a multiple and not a discount to its true value?
Plans are only as good as those who execute them and the
Concerned Shareholders' nominees have the passion and talent to
turn Synex around. 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 of Daniel Russell (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 Circular is also
available on Synex's SEDAR profile at www.sedar.com.
Full text of the letter below:
Dear Fellow Shareholders,
Some of you may have seen a press release issued by the Special
Committee of Synex defending their stagnant strategy and their
choice to push on with the status quo. Its artful use of innuendo
seems to be intended to make you afraid of me and other like-minded
shareholders and our call for positive change. Frankly, you
should be afraid. You should be afraid to let current
management, overseen by the current board, continue to manage your
investment. No amount of fear mongering should obscure the
stark facts:
- your investment has performed abysmally,
- your dividends have been suspended,
- costs have bloated, and
- despite 25 years at the helm and $33MM in assets, the President
has only three power plant assets under the Company's control.
No wonder the incumbents want to deflect attention.
Over the last few days, I have had the privilege of speaking
with many of my fellow shareholders and I hope to speak to many
more in the coming days. I have been overwhelmed with support
and grateful to have received your input. So far,
shareholders representing over 46% of the issued and outstanding
shares have expressed support for our approach as the need for a
new strategy has been significant. Every shareholder I spoke with
has shared their views on why they invested in Synex and their
frustration with the current leadership's inability to unlock the
value they still ascribe to Synex. All have been frustrated
at the constant dilution of their investment with each successive
equity financing with frankly nothing to show for it.
The Special Committee has made a desperate attempt to distract
you with speculation and innuendo. I was disappointed to see
the resignation of Paul O'Sullivan
from the Committee but understand his desire to distance himself
from their attempts at mud-slinging. However, I do want to
address my fellow shareholders and set the record straight on
several matters:
- Management notes that McKelvie and Newcastle projects have
water licenses and land tenure in place, implying that the projects
are in good shape. Shareholders know that McKelvie has been in
development for 15 years with no end in sight, but the real issue
is that BC Hydro has suspended taking applications under the
Standing Offer Program and there is a real risk that no Electricity
Purchase Agreement will be entered into. BC Hydro's own web site
clearly states: "BC Hydro is reminding applicants that spending
during this existing Program uncertainty is at the applicant's own
risk." This is the sort of issue the President should know and
be dealing with.
- While it is true, that in respect to the Victoria Lake Hydro
Project, the Company does not expect to invest additional cash, as
shareholders understand, when third parties pay for development,
our resulting economic interests become insignificant.
- Basic business fundamentals suggest that careful cost control
to improve cashflow is prudent. Two major strategic drivers – 1)
the lack of grasp for our current strategic needs by current
management with regards to the suspension of the BC Hydro Standing
Offer Program, and 2) the indifference with which breaching our
credit covenants has been treated by the incumbents – make it
imperative and the Concerned Shareholders will deliver on it.
- The Special Committee states that I have "consistently impeded
the growth of Synex". The truth is, I have participated in every
round of financing over the last few years. When asked to put
up further money recently, I asked for some basic business
disciplines – like an accounting of where the money has been spent.
As shareholders, you should be demanding the same, and the
Concerned Shareholders will deliver that to you. I will gladly
invest further in Synex but not while the wasteful and
value-destroying management approach is in place.
- The management team would have you believe that I have some
hidden motive to take over the Company for personal reasons and
have subtly hinted that I want a lucrative President's salary.
Nothing could be further from the truth. I tried the path of
reasonable negotiation and consistently offered to work with the
incumbent team. However, when a management team, and the board that
oversees it, is so out of touch with business realities and
shareholder interests, there is no "tweaking" that works; there
needs to be a replacement of the old, tired, failed ways with
fresh, sound ones. The Concerned Shareholders have put forward a
world-class, independent slate focused on one thing – overseeing
the turnaround of Synex. I do not seek a President's job and
benefits; I seek a Synex that delivers on its true intrinsic value.
I do not want to increase expenses, I want to reduce wasted money
and see it put to work for shareholders.
- It has been suggested that the Concerned Shareholders' slate is
not independent and somehow beholden to me. The truth of the matter
is, Synex needs independent thinking and a critical review – which
is exactly what these world-class nominees will bring to the table.
None of them needs to commit their valuable time and talent to take
on a turnaround situation like Synex, but have willingly chosen to
do so because that is their passion and talent. Our slate will
bring the fresh thinking and critical analysis to the issues the
board has not addressed for too long. Contrast this to a board
handpicked by an entrenched President and draw your own conclusions
on which slate is independent; which slate is looking out for your
best interests.
In the coming weeks, you can expect the current leadership team
to repeat their innuendo as they have nothing else with which to
work. You can expect them to claim they have great plans for
the Company. They will talk about new board committees and
will try and convince you they have some secret sauce of local
wisdom that is critical to the Company. As shareholders, keep
asking yourself two simple questions:
- if they knew what to do, why haven't they done it? and
- if any of their claims were true wouldn't your stock be trading
at a multiple and not a discount to its true value?
Plans are only good if they are properly executed. The
President's poor record of execution speaks for itself and nothing
can hide the incumbents' track record.
Contrary to what was stated by the Special Committee, I am a
"boots on the ground" manager, my office is in the field where
operations are executed, I have long held operations in BC and know
the environment well. Likewise, the board slate I have assembled is
personally committed to asking the tough questions, challenging the
status quo and looking for every opportunity to unlock the
tremendous potential that Synex represents.
The changes we plan are basic good business disciplines for a
company our size facing strategic headwinds. Your choice at this
shareholder's meeting is a simple one. A vote for management
is a vote for the same old playbook that has seen your investment
suffer so badly. A vote on the BLUE proxy is a vote
for much needed change.
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 press release contains
forward-looking statements. All statements that are not clearly
historical in nature or that necessarily depend on future events
are forward-looking, and the words "anticipate," "believe,"
"expect," "estimate," "plan," and similar expressions are generally
intended to identify forward-looking statements. These statements
are based on current expectations of the Concerned Shareholders and
currently available information. They are not guarantees of future
performance, involve certain risks and uncertainties that are
difficult to predict, and are based upon assumptions as to future
events that may not prove to be accurate. The Concerned
Shareholders do not assume any obligation to update any
forward-looking statements contained in this press release, except
as required by applicable law. Please refer to the Circular for
further information regarding the risks of these statements.
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.
A copy of this press release may be obtained on the Company's
SEDAR profile at www.sedar.com.
SOURCE Daniel Russell