CALGARY, March 27, 2015 /CNW/ - Robin L. Phinney, a significant shareholder and the designated representative of a group of concerned shareholders (collectively the "Concerned Shareholder Group") of Karnalyte Resources Inc. (TSX: KRN) ("Karnalyte" or the "Company"), comments on the press release issued by current management of Karnalyte on March 23, 2015 regarding its inability to meet its most basic filing and financial disclosure obligations. Management announced that it is unable to comply with securities law requirements to file the Company's audited annual financial statements, management's discussion and analysis, annual information form and associated filings by the annual filing deadline and has applied for a Management Cease Trade Order. Such announcements are often followed by write-downs and other material events and disclosures resulting in further depreciation of shareholder value.
In Mr. Phinney's view, this latest announcement is yet another example of how the current board and management are failing Karnalyte shareholders. In addition, management has:
- Failed to provide proper corporate governance as evidenced by the appointment of three successive CEOs since the last shareholders' meeting.
- Delayed the date for the meeting of shareholders called in response to the requisition (the "AGM") by nearly five months after the date the board received the Concerned Shareholder Group's meeting requisition.
- Justified the delay of the AGM on the basis of pursuing a speculative and potentially highly dilutive financing (which financing has yet to come to fruition and further details of which have not been generally disclosed since its announcement nearly three months ago).
- Denied the legitimate exercise of shareholders' statutory rights by rejecting the Concerned Shareholder Group's proposals, which were designed to ensure shareholders have a say on important decisions about the Company.
Management's excuse for its latest misstep is that the filing delay is necessary "because of ongoing discussions to obtain financing for the construction of the Wynyard Carnallite Project," even though management has previously stated that such discussions have been taking place since October, 2014. Even more disconcerting is management's statement that "the outcome of these discussions will likely have significant impacts on certain accounting disclosures, particularly with respect to the carrying value of the Corporation's Wynyard Carnallite Project." Mr. Phinney believes that shareholders should be prepared for further announcements by management regarding the Company's deteriorating financial condition, which could have material and adverse consequences for any long-term investment in Karnalyte.
Mr. Phinney is of the view that the recent actions of the current board and management show a pattern of conduct that may be oppressive or unfairly prejudicial to or that unfairly disregards the interests of shareholders. Accordingly, Mr. Phinney is evaluating damages suffered in connection with such conduct and is considering all available legal remedies. Mr. Phinney urges the current board to heed the Concerned Shareholder Group's call for change, and remains willing to engage with the board in constructive dialogue regarding the necessary board changes.
The Way Forward – Developing the Wynyard Carnallite Project
Given the overwhelming support the Concerned Shareholder Group has received to date, it is clear that shareholders have lost confidence in the current board and that new management is urgently needed to restore shareholder confidence, stabilize the management team and refocus on advancing the Wynyard Carnallite Project. The nominees of the Concerned Shareholder Group have created a detailed development plan for the project and have the skill and dedication necessary to execute on their plan to create shareholder value for all shareholders. The details of this development plan will be described in the final information circular of the Concerned Shareholder Group to be sent to all Karnalyte shareholders.
Mr. Phinney encourages shareholders who share the views of the Concerned Shareholder Group to support the nominees of the Concerned Shareholder Group for election to the Company's board at the upcoming AGM. Interested shareholders are also encouraged to visit www.krnshareholders.com to sign up for and receive important information from the Concerned shareholder Group and support the growing demand for change. There is no proxy for shareholders to vote yet, but shareholders can subscribe to the website above to ensure that they receive important updates and a form of proxy as soon as they are available. In the meantime, shareholders can download and submit a form from the website to pledge their support for the changes sought by Mr. Phinney and the Concerned Shareholder Group.
Except where otherwise stated herein, the statements contained in this press release are not made by or on behalf of the management of Karnalyte but are made by or on behalf of Mr. Phinney. Information concerning the business of the Concerned Shareholder Group to be considered at the AGM, including information relating to the nominees of the Concerned Shareholder Group, are contained in the concerned shareholder proxy circular dated March 5, 2015 (the "Concerned Shareholder Circular"). The Concerned Shareholder Circular has been filed and is available for review on the Company's SEDAR profile at www.sedar.com. Additional information in respect of the AGM will be contained in a final information circular prepared by or on behalf of the Concerned Shareholder Group and mailed to Karnalyte shareholders in advance of the AGM or as otherwise required by law. For further information regarding this news release, please contact Robin L. Phinney at +1 (403) 554-8126.
The registered address of Karnalyte is located at 1600, 333 – 7th Avenue S.W., Calgary, Alberta, T2P 2Z1. A copy of this press release may be obtained on the Company's SEDAR profile at www.sedar.com.
SOURCE Concerned Shareholder Group of Karnalyte Resources Inc.
For further information: please contact Robin L. Phinney at +1 (403) 554-8126