Concerned Shareholder of Espial Group Inc. Urges Shareholders to Vote FOR a Refreshed Board of Directors to Improve Performance

TORONTO, May 23, 2017 /CNW/ - Vantage Asset Management Inc. ("Vantage" or the "Concerned Shareholder") today issued the following letter to all shareholders of Espial Group Inc. (TSX: ESP) ("Espial" or the "Company"). This letter urges Espial shareholders to vote FOR an improved and refreshed Board of Directors of the Company (the "Board") to preserve and enhance value for all shareholders.

The Company's share price is down ~71% since the IPO in June 2007 and down ~38% over the past two years. The deterioration in value has taken place under the oversight of a largely stagnant incumbent Board. With two exceptions (Mr. Michael Hayashi and Mr. Aamir Hussain), the average tenure for the remainder of Espial's Board is over 16 years. Given the share price performance under this leadership regime, the Company could clearly benefit from fresh ideas and perspectives from experienced, independent directors. It is time to say "no" to the status quo and vote FOR positive change by electing the Concerned Shareholder's director nominees below provided for on our BLUE proxy attached hereto:

  • Mr. Ronan McGrath
    • Principal: Ronan McGrath & Associates
    • Former Chief Information Officer & President of Shared Operations: Rogers Communications
    • Former Chief Information Officer & Chief Accounting Officer: CN Rail

  • Mr. Christopher Mercer
    • Vice President Online and Telesales, Consumer Business Unit: Rogers Communications
    • Former Vice President of Marketing & Strategic Initiatives: MTS Allstream

  • Mr. Donald (Don) Wright
    • President & Chief Executive Officer: The Winnington Capital Group Inc.
    • Former Deputy-Chair: TD Bank Financial Group
    • Former Chairman & Chief Executive Officer: TD Securities

together with 3 of management's nominees (Jason Dolvane, Michael Hayashi and Aamir Hussain) for a reconstituted Board of 6 directors at the Company's upcoming meeting of shareholders scheduled to be held on June 13, 2017 (the "Meeting").

Vantage has worked in earnest to refresh the Board without the expense of a public campaign. Unfortunately, our private communication with the Company has yielded no real results. Since the announcement by the Company of our nomination under the Company's advance notice bylaw, we have been very encouraged by the overwhelming response from fellow shareholders, which we believe will result in much needed Board changes on June 13, 2017.


If you require additional information or require assistance voting your BLUE form of proxy, contact Kingsdale Advisors

toll-free in North America

and they will be able to assist you to ensure your vote is counted at the Meeting.


Dear Fellow Shareholders,

Vantage is a fundamental, value-based investment manager. Both as at the record date for the Meeting and currently, we own ~9.5% of the Company. Our firm manages funds for the benefit of charitable foundations, pensions, registered wealth advisors and accredited individual investors. We have an established track for identifying value across a variety of sectors, including technology. Some of Vantage's noteworthy technology investments in recent years include the following: Com Dev International (acquired by Honeywell for a 61% premium); Given Imaging (acquired by Covidien for a 27% premium); Miranda Technologies (acquired by Belden for a 64% premium); Mosaid Technologies (acquired by Sterling Partners for a 45% premium); and Zarlink Semiconductor (acquired by Microsemi Corporation for a 67% premium).

Like you, we believe Espial represents a compelling investment opportunity for shareholders. The Company's technology platform is a viable solution for cable operators to enhance the experience of subscribers by providing seamless access to traditional broadcast and over-the-top (OTT) content and services. We believe Espial is well-positioned to become a potential leader in this segment of the cable solutions market and, if management's efforts in this regard prove successful, the opportunity for shareholders could be significant.

Unfortunately, despite a promising technology, Espial faces some considerable challenges. Perhaps the most obvious challenge is the Company's inability to generate value for shareholders since becoming a public entity 10 years ago. A variety of factors have contributed to the legacy of sub-par performance, but we believe the most pressing issue is an ineffective and stagnant Board which owns very little stock – raising the fundamental question of whether the Board's interests are aligned with those of shareholders.

Fellow Espial shareholders should ask themselves the following questions:

  • Espial's share price has dropped ~71% since the Company's IPO in June 2007 under the current leadership. Is continuing with the status quo likely to achieve the best outcome for shareholders?

  • With less than ~2% of the Company's outstanding shares in aggregate, are the incumbent Board's interests appropriately aligned with those of shareholders?

  • Four of Espial's incumbent directors standing for re-election have served for an average of over 16 years. Does 16 years of service convey fresh perspectives and leadership for shareholders?

We strongly believe the answer to all the questions above are a resounding "NO". It is clearly evident from the erosion of shareholder value that the status quo is not working. It is time to say "NO" to the status quo and to vote FOR an improved and reinvigorated Board at the upcoming Meeting.

Background to the Nomination

Vantage invested in Espial because we believe the Company has a unique opportunity to transform itself from a sub-scale legacy solutions provider into a profitable, high growth software licensing business. We continue to believe this opportunity exists, but have concluded the central challenge facing the Company is not just related to strong competition or the pace of RDK-based market adoption. It has become evident the central issue facing Espial is a largely stagnant Board. Included below are some important facts for shareholders to consider:

  1. Share Price Performance: Espial's stock is down ~71% since its IPO and down ~38% over the past two years, materially underperforming all applicable equity indices.

  2. Stagnant Board: With the exception of Mr. Michael Hayashi who joined the Board in 2015 and Mr. Aamir Hussain who was recently added as a nominee for the upcoming Meeting, Espial's four other incumbent directors (Mr. Jaison Dolvane, Mr. Kumanan Yogaratnam, Mr. Peter Seeligsohn and Mr. Michael Lee) have collectively served on the Board for an average of 16 years. Sixteen years is well past the acknowledged best practice guidelines for a public company directorship. Espial's Board is very stale – which when considered in the context of the stock's near and long-term performance – clearly suggests fresh perspectives and oversight from new directors is long overdue.

  3. Board is Not Aligned Financially With Shareholders: Espial's Board is not well-aligned financially with shareholders. The two co-founders and directors, CEO Jaison Dolvane and CTO Kumanan Yogaratnam, each own less than 1% of the outstanding shares of the Company. To our knowledge, neither executive has purchased a single share in 10 years and only one of Espial's four independent directors has purchased a single share over this same period. Simply explained, in 10 years of governing the Company, only one Board member has ever bought stock – a purchase of 500 shares by Mr. Peter Seeligsohn in August of 2016 (approximately ~$1,000). The lack of aligned interests between the Board and shareholders needs to be addressed. It is long overdue that Espial's shareholders are represented on the Board.

  4. Shareholder Dilution: Since becoming a public company, Espial's total number of shares outstanding has quadrupled from 9 million to over 36 million. The share count has increased materially because the Company has issued ~$82 million in equity in four different financing transactions (source: Company filings). Unfortunately, investors have not benefited from these financings and Espial's inability to generate consistent operating earnings has required some of the capital raised to fund operating expenses – including compensation. More specifically, the two executive Board members (CEO and CTO) and the four independent directors have earned ~$12 million and ~$1 million, respectively, in total compensation over the past decade (source: Company filings).

  5. Poor Capital Allocation Decisions: Espial has acquired four companies since becoming a public company in 2007, specifically: Kasenna (2008), ANT plc (2013), BlueStreak Technologies (2015) and the Whole Home Solution (WHS) division from Arris International plc (2016). Unfortunately, the near and long term performance of the stock suggests that such acquisitions have not benefited investors. The Company's M&A track record renders it difficult to have confidence that the existing Board will make good decisions regarding the ~$42 million in net cash on Espial's current balance sheet.

  6. History of Operating Losses: Although Espial's annualized revenue has tripled from ~$8 million to ~$29 million in the past decade, profitability has remained sporadic with a cumulative operating loss of ~$39 million since inception (source: Company filings). The inability to achieve consistent earnings and cash flow after a decade as a public company should be a legitimate concern to all shareholders.

Thankfully, despite the challenges summarized above, Espial's technology, strong balance sheet and depressed valuation represent a compelling opportunity for shareholders, provided the Company's Board is upgraded with strong leadership.

In an effort to achieve this objective, with indicated support from shareholders representing over 30% of Espial's outstanding shares, we wrote a letter to the Board on March 13, 2017. The March 13 letter was a genuine attempt to improve and reinvigorate Espial's Board in a non-disruptive manner. We presented the Company with highly-qualified and independent candidates with relevant domain expertise and proven track records. A Board operating in the best interests of shareholders would have welcomed these candidates warmly given their collective depth of experience and proven leadership. Unfortunately, this was not the response we received.

The March 13 letter led to multiple weeks of communication with Espial's Chairman (Mr. Peter Seeligsohn) to schedule interviews with our proposed director nominees. The Company eventually agreed to meet with the candidates in Toronto on April 5, but frustratingly, no independent member from the Board or its Corporate Governance & Compensation Committee (the "Nominating Committee") even bothered to attend the meetings. Rather, only Espial's CEO attended the interviews. Needless to say, this development was concerning because Mr. Dolvane is neither an independent member of the Board, nor is he a member of the Nominating Committee.

As shareholders of any public company can appreciate, the CEO reports to the independent directors. Accordingly, it is not appropriate for the CEO to assume a leading role in the appointment of the independent directors that he/she ultimately reports to. However, it was not until Vantage raised this obvious concern that Espial (reluctantly) agreed to schedule a second round of phone interviews between our nominees and an independent member of the Board and Nominating Committee.

In total, Vantage wrote three formal letters to Espial's Board urging the Company to include our director nominees in the Management Information Circular ("Circular") for the Meeting. In response, while Espial announced the resignation of Mr. Tawfiq Arafat (which Vantage requested) on May 2, it also announced the appointment of Mr. Aamir Husssain on May 8 and on May 9, Espial filed its Circular announcing that it was nominating all six incumbent directors for re-election at the Meeting on May 9. The Circular did not include any of our proposed nominees.

In summary, after going through the process of interviewing our director nominees, Espial ignored all of our candidates and filed the Circular with only one change. Concurrent with this decision, the Company engaged two law firms (LaBarge Weinstein LLP and Davies Ward Phillips & Vineberg LLP) and hired a proxy solicitation advisor (Laurel Hill) to likely defend and further entrench the existing Board.

Needless to say, the events of recent weeks are disappointing given the quality of the candidates we proposed and the extent of the indications of support from other shareholders. The Company's behaviour has confirmed our view that Board changes are absolutely necessary to protect the best interests of all shareholders.

About the Concerned Shareholder's Nominees

Mr. Ronan McGrath

A former CIO of the Year, Ronan McGrath is a distinguished former President, CIO, and leader behind two of Canada's most successful turn-arounds: CN Rail and Rogers Communications.

In 2009, Mr. McGrath retired as CIO of Rogers Communications Inc., and President of Rogers Shared Services, Canada's national wireless carrier, and largest provider of cable services. In that role, Ronan rebuilt the entire IT infrastructure of the Rogers Group and was responsible for all call centre and customer operations. Ronan was also responsible for the team that restructured the alliance between Rogers and Microsoft in July of 1999.

Prior to Rogers Communications, Mr. McGrath was CIO of Canadian National Railways, Canada's largest railroad where he was responsible for a complete rebuild of CN's IT capability, the restructuring of the company, and the development of the initial strategic review of the company's future that led to the privatization. He was also responsible for the controllership, real estate and consulting activities of CN Rail.

Mr. McGrath has also been a Senior Manager with Arthur Andersen & Co. in various European countries, specializing in workout strategies for companies with financial challenges. He was awarded the CIO of the Year award in Canada in 1995, has served in the past on the advisory boards of a number of technology companies, including Compaq Computer and Lotus Development. He is a Past Chair of the Information Technology Association of Canada (ITAC).

Mr. McGrath is a graduate in Business Administration at Trinity College, Dublin, and is also a Chartered Accountant.

Mr. Christopher Mercer

Christopher Mercer is an experienced cable and telecom executive with a proven track record for transforming cable, wireless, and media businesses at Canada's leading communications companies. Over the past three years, Mr. Mercer has headed a number of strategic business initiatives at Rogers Communications. He currently manages a team of over 500 professionals responsible for cable and wireless sales and service. The mandate of the group is to rapidly grow Rogers' online presence and improve the overall experience of customers. Previously, Mr. Mercer ran Brand Management for Rogers's diverse media portfolio across Television, Radio, Publishing, Sports, and The Shopping Channel.

Prior to joining Rogers in 2014, Mr. Mercer was Vice President of Marketing & Strategic Initiatives at MTS Allstream where he led the product development and launch of innovative integrated fixed/wireless solutions. Previous to MTS Allstream, Mr. Mercer worked at Bell Canada as Vice President and General Manager where he headed the launch of Bell's wireless value brand.

Mr. Mercer holds a Masters in Business Administration (MBA) from the Harvard Business School and a Bachelor of Commerce from the University of Ottawa. He currently serves on the board of Advertising Standards Council of Canada.

Mr. Donald (Don) Wright

Don Wright has been the Chief Executive Officer and President at Winnington Capital Group Inc. since 2005. Mr. Wright has held numerous senior executive and board positions over the past 30 years, including President of Merrill Lynch Canada and Chief Executive Officer and Chairman of TD Securities. Mr. Wright has also worked with the Ontario Securities Commission, the Bank of Canada and the Department of Finance (Canada) to develop domestic and international capital markets.

Mr. Wright currently serves as independent Chairman of Richards Packaging Inc. and GMP Capital Inc. and he is an acting Director of the Bank of China – the only Canadian represented on the bank's board. Previously, Mr. Wright served as the Chairman of VIA Rail Canada Inc. and Vice-Chairman of The Toronto-Dominion Bank. He also serves as a Director of the American Cancer Center and is acting Governor of the Royal Ontario Museum Foundation. Mr. Wright previously served as a Trustee for The Hospital for Sick Children.

Time for Action

Individually and collectively, the nominees above have the experience, skills, and proven executive leadership to positively influence Espial's future performance. The objective is very straight forward: Reinvigorate Espial's Board and drive better performance by aligning the operational and strategic direction of the Company for the benefit of all shareholders. If successfully elected, the proposed nominees intend to guide Espial's reconstituted Board to initiate a comprehensive review focused on maximizing value for all shareholders.

Please complete the attached BLUE Proxy Form and vote FOR an improved and reinvigorated Board.

Best Regards,

"Mark Tredgett

"Darren Gottlieb"

Mark Tredgett

Darren Gottlieb

Managing Partner

Managing Partner

Vantage Asset Management Inc.

Vantage Asset Management Inc. 

120 Bremner Blvd., Suite 1420

120 Bremner Blvd., Suite 1420

Toronto, ON  M5J 0A8 

Toronto, ON  M5J 0A8










Complete, sign and date your BLUE form
of proxy. Scan both sides of the proxy and
return it by email to:

Complete, sign and date your BLUE 
form of proxy and return it by fax to
1-866-545-5580 toll-free or

Complete, date and sign your BLUE
form of proxy and return it to:

Kingsdale Advisors

The Exchange Tower
130 King Street West, Suite 2950,
P.O. Box 361
Toronto, ON M5X 1E2.




If you experience any problems or require assistance voting your BLUE form of proxy, contact Kingsdale Advisors, at 1-877-659-1820 toll-free in North America, or by email at and they will be able to assist you to ensure your vote is counted at the Meeting.

Additional Information about the Concerned Shareholder Nominees

Vantage is the registered and beneficial holder of 3,500,000 common shares of Espial.

Vantage has nominated Ronan McGrath, Christopher Mercer and Donald Wright as new independent directors to the Board of Espial at the Meeting or any postponement or adjournment thereof to serve as directors of Espial until the next annual meeting of shareholders, respectively, or until their successors are elected or appointed in accordance with applicable law. The table below sets out, in respect of each Concerned Shareholder nominee, his or her name, province or state and country of residence, his or her principal occupation, business or employment within the five preceding years, and the number of Common Shares beneficially owned, or controlled or directed, directly or indirectly, by such Concerned Shareholder nominee.

Name, Province or State and
Country of Residence

Present Principal Occupation,
Business or Employment and
Principal Occupation, Business or
Employment During the Preceding
Five Years

Number of Common Shares
Beneficially Owned or Controlled or
Directed (Directly or Indirectly)

Ronan McGrath

Ontario, Canada

Principal, Ronan McGrath and Associates, present


Christopher Mercer

Ontario, Canada

Vice President Online and Telesales, Consumer Business Unit, Rogers Communications Inc.


Vice President, Brand Management, Media Brands, June 2014-September 2015


Vice President, Marketing, The Shopping Channel, June 2013-June 2014


Vice President, Marketing and Strategic Initiatives, Allstream Inc., October 2011-April 2013


Donald Wright

Ontario, Canada

Chairman, Cinaport Capital Inc., present


President and CEO, The Winnington Capital Group Inc., present



Information relating to the number of Espial common shares beneficially owned, controlled or directed (directly or indirectly) by the Concerned Shareholder nominees, as well as information relating to the present principal occupation, business or employment of each Concerned Shareholder nominee within the five preceding years, not being within the knowledge of Vantage, has been furnished to Vantage by the respective Concerned Shareholder nominees.

To the knowledge of Vantage, no Concerned Shareholder nominee is, at the date hereof, or has been, within 10 years before the date hereof: (a) a director, chief executive officer or chief financial officer of any company (including Espial) that: (i) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, in each case that was issued while the Concerned Shareholder nominee was acting in the capacity as director, chief executive officer or chief financial officer; or (ii) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, in each case that was issued after the Concerned Shareholder nominee ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer; (b) a director or executive officer of any company (including Espial) that, while such Concerned Shareholder nominee was acting in that capacity, or within a year of such Concerned Shareholder nominee ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or became subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold its assets; or (c) a bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or became subject to or instituted any proceedings, arrangements or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such Concerned Shareholder nominee.

To the knowledge of Vantage, no Concerned Shareholder nominee has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation, or by a securities regulatory authority, or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a Concerned Shareholder nominee.

To the knowledge of Vantage, none of the directors or officers of Vantage, or any associates or affiliate of the foregoing, or any of the Concerned Shareholder nominees or their respective associates of affiliates, has: (a) any material interest, direct or indirect, in any transaction since the commencement of the Espial's most recently completed financial year or in any proposed transaction which has materially affected or would materially affect Espial or its subsidiaries; or (b) 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.

Information in Support of Public Broadcast Solicitation

Vantage is relying on the exemption under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations ("NI 51-102") and section 150(1.2) of the Canada Business Corporations Act to make public broadcast solicitations. The following information is provided in accordance with corporate and securities laws applicable to public broadcast solicitations.

This press release and any solicitation made by Vantage in advance of the Meeting is, or will be, as applicable, made by Vantage, and not by or on behalf of the management of Espial. Vantage has filed a copy of this press release containing the information required in section 9.2(4) of NI 51-102 on Espial's company profile on SEDAR at All costs incurred for any solicitation will be borne by Vantage, provided that, subject to applicable law, Vantage may seek reimbursement from Espial of Vantage's out-of-pocket expenses, including proxy solicitation expenses and legal fees, incurred in connection with a successful reconstitution of Espial's board. The anticipated cost of Vantage's solicitation is estimated to be $50,000 plus disbursements and customary fees.

Vantage has retained Kingsdale Advisors ("Kingsdale") as its strategic shareholder and proxy advisor. Kingsdale's responsibilities will principally include soliciting shareholders, providing strategic advice and advising Vantage with respect to the Meeting and proxy protocol.

Any proxies solicited by or on behalf of Vantage, including by Kingsdale, may be solicited by way of public broadcast, including through press releases, speeches or publications and by any other manner permitted under applicable laws. A proxy may be revoked by instrument in writing executed by a shareholder or by his or her attorney authorized in writing or, if the shareholder is a body corporate, by an officer or attorney thereof duly authorized or by any other manner permitted by law.

The registered address of Espial is located at 200 Elgin Street, Suite 1000, Ottawa, Ontario, K2P 1L5. A copy of this press release may be obtained on the Company's SEDAR profile at


Vantage has retained Norton Rose Fulbright Canada LLP as its legal advisor and Kingsdale Advisors as its strategic shareholder and proxy advisor.

SOURCE Vantage Asset Management Inc.

For further information: Kingsdale Advisors, at 1-877-659-1820 toll-free in North America, or by email at

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