Kingsway Financial Services to Kobex Capital Shareholders: Change Is On The Way

  • The special meeting scheduled for November 17, 2015 means that shareholders will have a choice between Kobex's self-interested incumbent Directors who have permitted shareholder value to languish and Kingsway's highly qualified independent nominees who are committed to returning money to shareholders as quickly as possible

TORONTO, Oct. 1, 2015 /CNW/ - Kingsway Financial Services Inc. ("Kingsway") is excited about the opportunity presented by the special meeting of shareholders of Kobex Capital Corp. ("Kobex") that is to be held on November 17, 2015 (the "Meeting") in order to bring real and value-creating change for all shareholders on an expedited basis.

"On behalf of our fellow shareholders, we appreciate the opportunity to bring change to Kobex sooner rather than later.  The problems of an anemic share price, a lack of a strategy to create value, and Directors who lack incentive to maximize value at the expense of shareholders have been compounded by an unwillingness or inability to address these issues in a timely fashion.   We are going to change that," said Larry Swets, President and Chief Executive Officer of Kingsway. "We thank all of our fellow Kobex shareholders who have reached out to us with support and are proud to represent their belief that change at Kobex is long overdue."

THE PROBLEMS AT KOBEX
The current Directors of Kobex have failed at creating value for shareholders:

  • Shares have languished for years due to a deficient and unaccountable structure.
  • Leadership structure lacks direction, vision and incentives to create shareholder value.
  • Kobex lurches from one-off investment to one-off investment with no plan to build long-term value.
  • Since Kobex changed from a mineral exploration company to an investment issuer shareholders have little or nothing to show for it.  Kobex's decision to invest in Mountain Province Diamonds Inc. has cost shareholders close to 28% in value of their investment.

THE KINGSWAY SOLUTION
Kingsway's plan for Kobex will reduce operating expenses and explore strategic alternatives to create value for all shareholders by:

  1. Replacing the conflicted, self-interested incumbent Directors with five highly-qualified, independent Directors.
  2. Leveraging Kingsway's strong, proven track record to create value for all shareholders.
  3. Reducing expenses and ensuring alignment with all shareholders by reducing Director pay from current levels to $10,000 per Director annually and committing to vote against any compensation package that provides stock below intrinsic value.
  4. Exploring strategic alternatives that will eliminate the discount between share price and intrinsic value.
  5. Considering implementing a share repurchase program to assist shareholders seeking immediate liquidity. (Kingsway does not intend to participate in any such buyback.)

"The Kingsway action plan means the interests of Kobex's leadership will finally be aligned with shareholders.  The November 17th meeting can't come soon enough, we want to move quickly to return money to shareholders," Swets concluded. 

While Kingsway's Nominees (as defined below) will act as independent fiduciaries, they are fully supportive of Kingsway's plan to maximize value for all Kobex shareholders.

ABOUT KINGSWAY'S INDEPENDENT AND EXPERIENCED BOARD NOMINEES
Kingsway believes that it is time for new independent leadership on the board of directors of Kobex (the "Board"). As set out in Kingsway's requisition on September 17, 2015 (the "Requisition"), Kingsway proposes to remove each of Michael J. Atkinson, E. Kenneth Paul, David M. Schmidt and Paul P. van Eeden (or their respective appointed successor(s)) (collectively, the "Current Kobex Directors") as Directors of Kobex and elect the following five (5) new directors to the Board (collectively, the "Kingsway Nominees"):

  • John T. Fitzgerald - Mr. Fitzgerald is founder and Managing Partner of Argo Management Partners and Managing Member of Argo Holdings Fund I, LLC.  He is the Chairman of Hunter MFG, LLP, and serves on the board of directors of each of Oak Patch Gifts, Progressive Bronze Products, Atlas Financial Holdings Inc. (NASDAQ: AFH) and 1347 Capital Corp (NASDAQ: TFSC);
  • Gregory P. Hannon - Mr. Hannon is Vice-President and Director of Oakmont Capital Inc., a Toronto-based private investment company. He previously was Founding Partner of Lonrisk, a Toronto-based specialty insurer and subsidiary of the London Insurance Group, where he was the Vice-President. He has been a member of the board of directors of Kingsway since 2009;
  • Joshua S. Horowitz - Mr. Horowitz is Managing Director at Palm Ventures where he is solely focused on investments in the public markets and helps oversee the Palm Global Small Cap Fund. Mr. Horowitz previously served as Director of Research for both Inverlochy Capital and Berggruen Holdings. He has been appointed to the board of directors of each of Lincoln General Insurance Company, 1347 Capital Corp. (NASDAQ: TFSC) and 1347 Property Insurance Holdings, Inc. (NASDAQ: PIH);
  • Andrew McIntyre - Mr. McIntyre is a Managing Director of Segwin Consulting Ltd., a consultancy specializing in M&A advisory, business valuation, strategy and business development. Previously, Mr. McIntyre was Vice President, Corporate Development at Vicwest Inc.; and
  • R. Michael Powell - Mr. Powell serves as Managing Director in the Investment Banking Department at EarlyBirdCapital, Inc., where he focuses primarily on Special Purpose Acquisition Company ("SPAC") IPOs and SPAC business combinations. Prior to joining EarlyBirdCapital, Mr. Powell served as Managing Director at Pali Capital, Inc.

If elected, each Kingsway Nominee would serve until the next annual general meeting of shareholders or until their successors are elected or appointed. In the event that the special resolution removing each of the Current Kobex Directors is not passed, the Requisition proposes to fix the number of directors of Kobex at nine (9) and elect each of the Kingsway Nominees (in each case to hold office until the next annual general meeting of shareholders or until their successors are elected or appointed).

ABOUT KINGSWAY FINANCIAL SERVICES INC.
Kingsway is a holding company functioning as a merchant bank with a focus on long-term value-creation. Kingsway owns or controls stakes in several insurance industry assets and utilizes its subsidiaries, 1347 Advisors LLC and 1347 Capital LLC, to pursue opportunities acting as an advisor, an investor and a financier. The common shares of Kingsway are listed on the Toronto Stock Exchange and the New York Stock Exchange under the trading symbol "KFS".

KINGSWAY'S ADVISORS
Kingsway has engaged Norton Rose Fulbright Canada LLP as its legal advisor and Kingsdale Shareholder Services as its strategic advisor and proxy solicitor.

This news release is not intended to, and does not, constitute a solicitation of proxies in relation
to the Meeting. Any solicitation of proxies by or on behalf of Kingsway Financial Services in relation to the Meeting will take place upon and following the dissemination of the dissident information circular and other meetings materials in accordance with applicable law.

The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable securities laws. Although the Meeting has been scheduled to take place on Tuesday, November 17, 2015, shareholders are not being asked at this time to execute a proxy in favour of the Kingsway Nominees or any other resolution set forth in the Requisition. In connection with the Meeting, Kingsway intends to file a dissident information circular (the "Information Circular") in due course in compliance with applicable securities laws.

Notwithstanding the foregoing, Kingsway is voluntarily providing the disclosure required under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations in accordance with securities laws applicable to public broadcast solicitations.

This press release and any solicitation made by Kingsway in advance of the Meeting is, or will be, as applicable, made by Kingsway, and not by or on behalf of the management of Kobex. All costs incurred for any solicitation will be borne by Kingsway, provided that, subject to applicable law, Kingsway may seek reimbursement from Kobex of Kingsway's out-of-pocket expenses, including proxy solicitation expenses and legal fees, incurred in connection with a successful reconstitution of the Board.

Kingsway is not soliciting proxies in connection with the Meeting at this time, and shareholders are not being asked at this time to execute proxies in favour of the Kingsway Nominees (in respect of the Meeting) or any other resolution set forth in the Requisition. Any proxies solicited by Kingsway will be solicited pursuant to the Information Circular sent to shareholders of Kobex after which solicitations may be made by or on behalf of Kingsway, by mail, telephone, fax, email or other electronic means, and in person by directors, officers and employees of Kingsway or any proxy advisor that Kingsway may retain or by the Kingsway Nominees.

Any proxies solicited by Kingsway in connection with the Meeting may be revoked by instrument in writing by the shareholder giving the proxy or by its duly authorized officer or attorney, or in any other manner permitted by law and the articles of Kobex. None of Kingsway or, to its knowledge, any of its associates or affiliates, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter proposed to be acted on at the Meeting, other than the election of directors to the Board.

Kobex's principal business office is Suite 1703, Three Bentall Centre, 595 Burrard Street, PO Box 49131, Vancouver, British Columbia V7X 1J1. A copy of this press release may be obtained on Kobex's SEDAR profile at www.sedar.com.

SOURCE Kingsway Financial Services Inc.

For further information: Shareholders of Kobex: Hassan Baqar, Kingsway Financial Services Inc., 1.847.700.8064, hbaqar@kingswayfinancial.com; Media: Ian Robertson, Kingsdale Shareholder Services, Vice President, Communications, Direct: 416.867.2333; Cell: 647.621.2646, irobertson@kingsdaleshareholder.com

RELATED LINKS
http://www.kingsway-financial.com

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