CALGARY, March 5, 2015 /CNW/ - Robin L. Phinney, a significant shareholder and the designated representative of a group of concerned shareholders (collectively, together with Mr. Phinney, the "Concerned Shareholder Group") of Karnalyte Resources Inc. (TSX: KRN) ("Karnalyte" or the "Company"), today filed a concerned shareholder information circular and letter to shareholders (collectively, the "Concerned Shareholder Circular") in connection with the upcoming annual and special meeting of shareholders of the Company to be held on May 12, 2015. The Concerned Shareholder Circular sets out the background and rationale for the resolutions and proposals put forward by or on behalf of the Concerned Shareholder Group, including detailed biographical information on the Concerned Shareholder Nominees standing for election as directors of the Company. A copy of the Concerned Shareholder Circular may be obtained on the Concerned Shareholder Group's website at www.krnshareholders.com or under the Company's SEDAR profile at www.sedar.com.
Mr. Phinney also responded to the current board's refusal to respect the statutory rights of shareholders by rejecting the shareholder proposal submitted on behalf of the Concerned Shareholder Group (the "Concerned Shareholder Proposal") which, if adopted, would have allowed shareholders to have a say on certain material transactions of the Company. The Concerned Shareholder Proposal was submitted following the announcement by the current board of a controversial proposed US$700 million financing for the Company. Such potentially dilutive financing was only announced after the Concerned Shareholder Group called for changes to the current board.
Mr. Phinney stated: "I submitted the shareholder proposal in order to protect the interests of Karnalyte shareholders, which would have required the current board to seek input and approval from shareholders prior to entering into significant transactions involving changes to the strategic direction of Karnalyte, significant capital investments or financial commitments by Karnalyte or very dilutive share issuances. The unqualified rejection by the current board of the shareholder proposal confirms that the current board has no interest in listening to shareholders or in building long-term shareholder value."
Karnalyte's current board claimed that the Concerned Shareholder Proposal was "not legally valid" because it would "unduly and extraordinarily restrict the ability of the Directors from fulfilling their duties to set the strategy for the Corporation, including accessing financing." To the contrary, the Concerned Shareholder Proposal would pose no impediment to transactions that serve the interests of all Karnalyte shareholders. Shareholders, as owners of the Company, have statutory legal rights, including the shareholder proposal regime, by which shareholders are permitted to influence the strategic direction of the Company. Karnalyte's refusal to put the Concerned Shareholder Proposal to a shareholder vote as required by law is a transparent example of a self-interested board turning a blind eye to the valid exercise of shareholder rights.
Mr. Phinney, on behalf of the Concerned Shareholder Group, has previously warned the current directors against taking actions which serve to entrench the current board. Neither the unanimity of the decision to reject the Concerned Shareholder Proposal nor the current board's reliance on counsel in making such decision makes it any less inappropriate and unacceptable. Mr. Phinney fully reserves his rights in respect of the current board's decision and is evaluating with counsel appropriate legal remedies.
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 requisitioned meeting, including information relating to the nominees of the Concerned Shareholder Group, are contained in the press release of Mr. Phinney dated December 23, 2014 under the sections entitled "Concerned Shareholder Nominees" and "Additional Information Relating to Public Broadcast Solicitations" (collectively, the "Additional Information"). The press release containing the Additional Information has been filed on the Company's SEDAR profile at www.sedar.com.
There is no proxy for you to vote yet, but you may obtain additional information in respect of the requisitioned meeting from the Concerned Shareholder Group's website at www.krnshareholders.com. You may also sign up at the website to ensure that you receive important updates and the Concerned Shareholder's form of proxy as soon as they are available. You may also pledge your support in favour of the Concerned Shareholder Nominees and the Concerned Shareholder Proposals by following the instructions on the website. 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.