VANCOUVER, Sept. 20, 2018 /CNW/ - Concerned shareholders,
Kulwant Malhi and BullRun Capital
Inc. (the "Concerned Shareholders") of GrowMax Resources
Corp. (the "Corporation" or "GrowMax") (TSX-V: GRO)
today reminded shareholders that the 8:00
a.m. (Calgary time)
September 21, 2018 voting deadline is
fast approaching and encouraged shareholders to vote today.
The Concerned Shareholders are also pleased to announce that
Glass Lewis & Co. LLC, ("Glass Lewis") a leading proxy
advisory firm, has recommended that GrowMax shareholders vote
AGAINST the PrimaSea transaction for a number of reasons. Glass
Lewis' report states that:
"...while we generally grant considerable deference to
management and the board on matters of strategic direction, in this
case, we do not believe the Company has sufficiently justified the
financial aspects of the proposed transaction. PrimaSea suffers
from limited liquidity, including negative working
capital and negative shareholders' equity, and has a
history of losses and negative operating cash flows.
The purchase price appears well out of line with precedent
transactions on the basis of trailing revenue multiples and the
transaction would be highly dilutive to the ownership interests of
existing shareholders. Moreover, investor reaction to news of the
proposed transaction was overwhelmingly negative and GrowMax shares
now trade at a significant discount to the Company's projected net
cash balance at closing, suggesting investors ascribe negative
value to the transaction. Based on the forgoing factors, we
cannot reasonably conclude that the proposed transaction is in the
best interests of shareholders at this time."
Glass Lewis also commented on the proposed PrimaSea transaction
agreement which will serve to entrench the current board, and limit
the ability of current shareholders to have a say in the
Corporation's future. Glass Lewis' report notes that:
"Moreover, we are concerned that the proposed transaction
includes voting agreements that would serve to entrench the
incumbent board and management team. Under the transaction
agreement, for a two-year period following completion, the Sellers
will be required to support the board candidates nominated by the
incumbent board. Given that the Sellers will hold 50% of the
enlarged share capital, we expect minority shareholders will have
limited voice on matters of board composition going forward. We
also question the timing of these voting agreements in light of the
ongoing proxy fight with BullRun."
Further to the Concerned Shareholders' news release dated
September 18, 2018, the Concerned
Shareholders emphasize the proposed $0.075 dividend is for ALL SHAREHOLDERS.
The Concerned Shareholders believe that distributing cash back to
you is the best use of the Corporation's assets especially when
compared to the proposed PrimaSea transaction which will serve as a
sinkhole for the Corporation's assets and result in the severe
dilution of all of our shareholdings. The current board and
management have depleted the treasury from over $50 million in 2015, to just over $30 million today, without development of an
operating business. This trend will continue unless shareholders
support the Concerned Shareholders, who include the Corporation's
largest individual investor. The Concerned Shareholders note
that GrowMax will have substantial cash and working capital on hand
to pursue investments and transactions that will maximize
shareholder value after the distribution of the dividend.
The Concerned Shareholders encourage all shareholders to read
the Concerned Shareholders' meeting materials, which are available
at www.laurelhill.ca/abetter-growmax and urge Shareholders to
vote only the YELLOW proxy. By voting only the
YELLOW proxy shareholders will be voting:
- AGAINST a highly-dilutive transaction that will result
in the handover of 60% of your company to GrowMax directors and
officers;
- AGAINST the re-election of a board of directors that has
destroyed shareholder value in favour of their own
self-interest;
- AGAINST the adoption of a new equity incentive plan that
will further increase the shareholdings of directors and officers
and further dilute your interest in the Corporation;
- AGAINST the adoption of an advance notice by-law that
gives the board of directors the sole discretion to dismiss
your shareholder nominees;
- FOR the new Concerned Shareholder nominees who will
rejuvenate the GrowMax board of directors and take the Corporation
in a new direction that will eliminate wasteful spending and
maximize shareholder value; and
- FOR the issuance of a dividend payment which will result
in a cash being paid directly to YOU instead of being used
to fund a money-losing operation.
Shareholders should discard any blue proxy they may
receive and should vote only their YELLOW proxy well in
advance of the proxy voting deadline of September 21, 2018 at 8:00
a.m. Calgary time.
Due to the essence of time, Shareholders are asked to vote
online or by telephone by following the instructions found on the
YELLOW proxy to ensure votes are received in a timely manner. IF
YOU HAVE ALREADY VOTED USING MANAGEMENT'S PROXY, YOU CAN STILL
SUPPORT THE CONCERNED SHAREHOLDERS BY USING THE YELLOW PROXY. THE
LATER DATED PROXY WILL SUPERSEDE.
Remember every vote counts to protect your investment.
Regardless of the number of shares you own, please vote your
YELLOW proxy today.
Questions and requests for assistance may be directed to the
Concerned Shareholders' Proxy Solicitor:
Laurel Hill Advisory Group
North America Toll Free:
1-877-452-7184
Outside North America:
1-416-304-0211 (collect)
Email: assistance@laurelhill.com
SOURCE BullRun Capital Inc.