MONTREAL, March 24, 2017 /CNW Telbec/ - Valsef Capital and Valsef Trading (together "Valsef" or "we"), a significant shareholder of Redknee Solutions Inc. ("Redknee") owning approximately 5.7 million common shares, today announced the delivery of a letter to the Redknee Board of Directors (the "Board"), the full text of which is included below.
Earlier this month, we privately voiced our concerns to the Board, but these have yet to be addressed. In light of the upcoming Annual General Meeting, it is in the interest of all shareholders to be made aware of our particular concerns. In today's letter to the Board, Velsef outlines its concerns regarding perceived weaknesses in investor communications and lack of practical independence on the part of the Board.
The full text of the letter to the Board follows:
Dear Members of the Board of Directors of Redknee Solutions Inc.:
To begin, Valsef holds ESW Capital, LLC ("ESW") in high regard as a software operator and a turnaround specialist. Our opinion on the matter was detailed, at length, in articles published on Seeking Alpha (March 9, 2017) and SumZero (March 10, 2017).
Shareholders of a publicly traded company such as Redknee Solutions Inc. ("Redknee"), however, have expectations when it comes to investor communication. Simply put, they expect to know how the companies they invest in are being managed. Since ESW has acquired control of the Redknee Board of Directors (the "Board"), there has been a lack of clear communication from Redknee and shareholder expectations in this respect have not been met. For instance, the announcement of Redknee's new strategic plan on February 23, 2017 (the "Strategic Plan") and the disclosure of the capital required to implement the restructuring described in the Strategic Plan do not contain details about their tangible benefits for Redknee and its shareholders.
The importance of good investor communication will be critical in the event of an equity raise, such as the one proposed by ESW as part of the Strategic Plan. In such a case, investors require clear and detailed information about the prospects of the company's business in order to make an informed decision with respect to their participation.
As Valsef believes, our concern about investor communication can be addressed, for the benefit of all shareholders, by increasing the practical independence of the Board. More particularly, the Board requires independent directors with a deep experience, proven by their prior work, in understanding and meeting the expectations of shareholders of publicly traded companies.
In our opinion, Christy Jones and Farhan Thawar, having worked in private companies during most of their careers, do not meet this high standard. Indeed, their association with ESW and its related companies may create an apprehension of conflict of interest in the eyes of certain shareholders. In fact, Mrs. Jones co-founded Trilogy, a company related to ESW, with Mr. Joe Liemandt, the CEO of ESW. For his part, Mr. Thawar has worked at Trilogy as a developer.
Moreover, it is our understanding that ESW's turnaround strategy involves the use of ESW owned and related party companies such as Crossover and DevFactory. These two companies are outsourcing platforms used by ESW to manage costs. It is critically important that truly independent board members are present to make decisions when it comes to business with these related parties.
As a solution, we would propose to complement ESW's strong operation strength by the appointment to the Board of two fully independent directors with strong public market experience. This will make Redknee stronger and will benefit all shareholders.
Since the upcoming Annual General Meeting is scheduled on March 29th, we urge Redknee, for the benefit of all shareholders, to postpone the meeting in order to propose a modified slate of director nominees whereby Christy Jones and Farhan Thawar will be replaced by two fully independent directors which we will designate.
Chief Strategist, Valsef Capital
7405 Transcanadienne, Suite 100, St.Laurent, Quebec, H4T 1Z2
SOURCE Valsef Capital
For further information: Mohan Plakkot, Chief Strategist, Valsef Capital Inc., Email: firstname.lastname@example.org, Telephone: 514-995-3346