- Urges shareholders to vote their BLUE proxy in favour of five new and experienced nominees to replace entrenched incumbent directors
- Outlines plan for change to create value for Synex shareholders
- Announces significant support of over 46% of shares looking for much needed change
VANCOUVER, Oct. 5, 2017 /CNW/ - Daniel Russell, a director and the single largest shareholder of Synex International Inc. (TSX:SXI) ("Synex" or the "Company"), along with other Concerned Shareholders, today announces that he has filed a proxy circular (the "Circular") and letter to shareholders in respect of the upcoming annual general meeting of Synex scheduled for November 3, 2017 (the "Meeting").
He stated: "Early momentum for our nominees continues to grow with the support of now over 46% of the issued and outstanding shares looking to bring much needed change to Synex with a refreshed Board focused on profitability, asset utilisation and the revaluation opportunity for our stock that positive changes will avail."
The Concerned Shareholders have become aware of a press release apparently issued by the Company's incumbent management on October 4, 2017 referencing confidential discussions between Daniel Russell and the Special Committee of Synex and to the effect that giving shareholders an opportunity for meaningful change through a contested process is a costly distraction that could have been avoided. The Concerned Shareholders are disappointed and frustrated at the suggestion that resorting to shareholder democracy is bad. The fact is that Daniel Russell and the Concerned Shareholders decided to endorse an alternative, superior board slate only when it became abundantly clear that the incumbent board lacks any appreciation for the need for change. Indeed the incumbents' October 4th press release reiterates a firm commitment to the status quo that has resulted in sustained underperformance.
It is time to put shareholders first and to let them decide for themselves the future of the Company. A vote for management is a vote for continued underperformance and corresponding undervaluation of Synex stock. A vote with the Concerned Shareholders is a vote for a new approach focused on you, the shareholder, and the profitable, professional management of the Company.
Shareholders are urged to read the circular and vote their BLUE proxy or voting instruction form by 5:00 p.m. (PDT) on October 31, 2017. Shareholders with questions about voting their shares should call Kingsdale Advisors at 1-866-581-0507 or 1-416-867-2272 outside of North America or email [email protected]. A copy of the information circular is also available on Synex's SEDAR profile at www.sedar.com.
Full text of the letter below:
October 3, 2017
Dear Fellow Shareholder,
As concerned shareholders of Synex International Inc., we are asking for your vote at the Company's annual general meeting scheduled to be held on Friday, November 3, 2017 at 10:00 A.M. (Pacific Daylight Time) at the offices of Clark Wilson LLP, 900 – 885 West Georgia Street, Vancouver, British Columbia V6C 3H1, and at any and all adjournments or postponements thereof. Now is the time to make a change. Your vote will decide the future of the Company and your investment.
Daniel Russell and other concerned shareholders (the "Concerned Shareholders") hold an aggregate of approximately 42.16% of the common shares ("Shares") of the Company. We have significant skin in the game and have willingly participated in numerous equity raises because we believe in the true intrinsic value of the Company. However, we have seen our investment poorly managed by an ineffective President, Gregory Sunell, and a stagnant board of directors of the Company (the "board") that panders to his demands. As shareholders, we are furious and you should be too. We will remind you of the following key facts that highlight the glaring need for immediate change:
- When challenged by Daniel Russell over critical strategic business matters, the President's immediate reaction was to appoint a friendly director and nominate another to the board in order to insulate himself from scrutiny in a desperate act of entrenchment. The President, together with another director, also exercised options to increase the number of votes they would have at the Meeting, while denying that same opportunity to Mr. Russell and another optionholder.
- The President is resistant to change, out of touch with current business realities and the legitimate interests of ordinary shareholders.
- After 25+ years of working for the Company, the President has become complacent and indifferent to shareholders.
- Under the President's watch, the Company has underperformed the S&P/TSX Composite Index on a 1, 3 and 5-year basis. The President has been entrusted with over $33MM in assets and yet after 16 years as President, has been barely able to turn a profit. This lack of ability to manage the Company has led to massive dilution with each successive equity raise being used to simply maintain the status quo and his own lifestyle.
- Despite its enviable land interests, the Company has only three power plant assets under its control.
The Concerned Shareholders have repeatedly attempted to work constructively with the board and the Special Committee formed when they raised the need for change. It is clear from discussions that the board is not open to making the necessary changes and instead, prefers to maintain the status quo that has proved destructive for many years. The Concerned Shareholders have now been left with no choice but to protect the interests of fellow shareholders.
With your help, we will achieve a result at the Meeting which will serve the interests of all shareholders by reconstituting the board with the following five highly qualified nominees: Daniel J. Russell, Tanya L. DeAngelis, David Schincariol, Cecilia Tam and Richard McGivern. Each of our nominees have the requisite experience, expertise, perspective and motivation to maximize the Company's true potential value.
The current President and key members of management act as though the Company exists to underwrite their lifestyles. Our nominees understand that the board is there to represent shareholders' interests and that management serves at the pleasure of the board. This major disconnect in shareholder focus is the reason we need wholesale changes to the board and not mere window-dressing. The focus going forward will be on you, the shareholder. This Meeting is your last opportunity to end this madness and to bring a change in leadership that will protect and enhance the value of your investment. Only your vote, no matter how many Shares you own, can reconstitute the board. Our nominees have a strategic plan and it needs to be implemented now:
- We will deal with the very real strategic, balance sheet, risk management and profitability issues we are facing; issues that the current President either denies exist or is unable to handle;
- We will assess every aspect of our business against industry consistent processes and key performance indicators and either devise a plan to improve contribution or scale back to a business consistent level;
- We will streamline every bloated area of the Company, starting with the board and management. We will drastically reduce overhead to increase cashflow and profitability;
- We will critically analyze operations to determine if all assets are fully utilized and accretive;
- We will look for opportunities to fully extract value from our asset base;
- We will evaluate the reinstatement of shareholder dividends in line with increased cashflow and profitability;
- We will engage with you, our shareholders, be open to your input and be transparent with you, providing ongoing updates on our progress to turn the Company around; and
- Our nominees will bring much needed skills, energy, independent thought and critical thinking to the board and will implement much needed governance and transparency.
We have great confidence that you will judge current management and certain members of the board by their track record of abysmal performance, inadequate disclosure and atrocious corporate governance standards. We invite you to join us on a path to a brighter future.
The time has come to provide the Company with the direction and leadership it requires through a new shareholder-focused board. We are committed to bringing passion and purpose back into the Company and delivering strong shareholder returns in an ethical and environmentally sound way. EVERY VOTE WILL COUNT AND YOU MUST TAKE ACTION. This is the last chance to preserve and build value in the Company. After this Meeting, it will be too late.
Director & Shareholder, Synex International Inc.
Daniel Russell has retained Dentons Canada LLP as legal counsel, and Kingsdale Advisors as his strategic shareholder advisor and proxy solicitation agent.
This news release is also issued pursuant to the early warning requirements under applicable Canadian securities laws. Daniel Russell, Tanya DeAngelis, Russell Family Holdings Inc. and Joan Arietta Russell (collectively, the "Concerned Shareholders") may be considered to be acting jointly or in concert with each other as a result of such shareholders having an agreement, commitment or understanding to exercise jointly voting rights in connection with their Common Shares, such agreement, commitment or understanding having occurred on September 29, 2017. Mr. Russell, Tanya DeAngelis, Russell Family Holdings Inc. and Joan Arietta Russell own or control 11,979,000, 1,028,000, 1,935,500 and 330,000 Common Shares, respectively, and the Concerned Shareholders, as a group, own an aggregate of 15,272,500 Common Shares, representing approximately 43.96% of the current outstanding Common Shares. A copy of the early warning report to which this news relates will be available under the Company's SEDAR profile at www.sedar.com. For further information or to obtain a copy of the early warning report in connection with this news release after it has been filed, please contact Daniel Russell at 64 Dalkeith Drive, Brantford, Ontario N3P 1N6.
Except where otherwise stated herein, the statements contained in this press release are not made by or on behalf of the management of the Company but are made by or on behalf of the Concerned Shareholders. Information concerning the business of the Concerned Shareholders to be considered at the Meeting is contained in the Circular. The Circular is available for review on the Company's SEDAR profile at www.sedar.com.
The Company's head office is 400 - 1444 Alberni Street, Vancouver, British Columbia, Canada, V6G 2Z4. A copy of this press release may be obtained on the Company's SEDAR profile at www.sedar.com.
SOURCE Daniel Russell
For further information: Ian Robertson, Executive Vice President, Communication Strategy, Kingsdale Advisors, Direct: 416-867-2333, Cell: 647-621-2646, Email: [email protected]