CALGARY, April 15, 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"), is pleased to announce that the largest shareholder of Karnalyte, Gujarat State Fertilisers and Chemicals Ltd. ("GSFC"), has agreed to support the immediate reconstitution of the Karnalyte Board of Directors. The agreement also provides a proposed framework for raising funds required by the Company to implement the Company's Wynyard Carnallite Project by the shareholders and their nominee Board members.
Following the Company's recent announcement regarding the extraordinary write-off of the Wynyard Carnallite Project (representing a write-off of approximately 94% of the value of the asset based on the Company's unaudited balance sheet as at September 30, 2014), and in light of the Company's disconcerting statement that it "intends to review whether there is any possibility of finding a buyer for the Wynyard Project or whether it can be otherwise disposed of on reasonable terms", Mr. Phinney and GSFC, who are concerned that the incumbent Board may take steps towards wrongful and unwarranted disposal of the Company's assets and therefore negatively affect shareholder value, have sent a joint letter to the Board demanding an orderly transition of the Board. The letter also warns the Board against taking any action outside the ordinary course of business or disposing off the assets of the Company until the Board has been reconstituted with nominees supported by shareholders.
Mr. Phinney also acknowledges the Company's press release announcing the commencement of legal proceedings against him and his family. Mr. Phinney believes the allegations made by the Company's management are baseless, without merit, and in furtherance of a strategy to disenfranchise shareholders of their rights. In particular, management is seeking court orders to prohibit Mr. Phinney from soliciting proxies (and disqualifying any proxies solicited), proposing directors for election to the Board, and exercising voting rights.
Mr. Phinney commented: "On behalf of the Concerned Shareholder Group, we thank shareholders for their continuing support. We will continue to fight for the changes required at Karnalyte in order to stop the value destruction of our Company under the incumbent Board and management. We are appalled with the conduct of the incumbent Board members and their disregard for the wishes of the majority of the Karnalyte shareholders."
Mr. Phinney beneficially owns, or has direction or control over (directly or indirectly), an aggregate of 4,012,409 common shares of Karnalyte, representing approximately 14.60% of the outstanding common shares of Karnalyte (based on a total of 27,479,010 common shares reported as outstanding in Karnalyte's most recent management discussion and analysis for the year ended December 31, 2014). As the largest shareholder, GSFC beneficially owns, or has direction or control over (directly or indirectly), an aggregate of 5,490,306 common shares of Karnalyte, representing approximately 19.99% of the outstanding common shares of Karnalyte. Collectively, Mr. Phinney, the Concerned Shareholder Group and GSFC beneficially own, or have direction or control over (directly or indirectly), an aggregate of 11,579,940 common shares of Karnalyte, representing approximately 42.14% of the outstanding common shares of Karnalyte.
In addition to GSFC, the Concerned Shareholder Group has also received written expressions of support from other shareholders representing approximately 17% of the outstanding shares. In aggregate, holders of approximately 59% of the outstanding common shares of Karnalyte are supportive of an immediate reconstitution of the Board.
This news release is issued pursuant to the early warning requirements under applicable Canadian securities laws. Mr. Phinney intends to initiate or participate in, together with the other members of the Concerned Shareholder Group, all actions as they consider necessary or advisable to preserve and enhance shareholder value at Karnalyte and to protect their investment and that of Karnalyte's other long-term shareholders. A copy of the early warning report to which this news relates will be available under Karnalyte's SEDAR profile at www.sedar.com. For further information, including to obtain a copy of the early warning report in connection with this news release after it has been filed, please contact Robin L. Phinney by telephone at +1 (403) 554-8126, or in writing at 403 Woodview Bay, Okotoks, Alberta, T1S 1M1.
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 annual shareholders' meeting, 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 annual shareholders' meeting 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 annual shareholders' meeting or as otherwise required by law.
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: Robin L. Phinney by telephone at +1 (403) 554-8126, or in writing at 403 Woodview Bay, Okotoks, Alberta, T1S 1M1