ZUG, Switzerland and VANCOUVER, April 22, 2019 /CNW/ - HIVE Blockchain Technologies Ltd. (TSX.V:HIVE) (OTCQX:HVBTF) (the "Company" or "HIVE") advises that on April 19, 2019 Genesis Mining ("Genesis"), the largest shareholder of the Company, holding approximately 26.3% of the Company's outstanding shares, has requisitioned a meeting of shareholders for the purpose of removing directors independent of Genesis and electing a board of directors, the majority of whom would be senior officers and employees of Genesis. On April 20, 2019, the HIVE Board met and appointed an independent Special Committee of the Board to deal with the requisition and related contractual disputes between Genesis and HIVE which gave rise to the requisition. The Special Committee will act in the interests of all HIVE shareholders and the Special Committee will set a date for the requisitioned meeting to be held within four months of proper delivery of the requisition notice.
The meeting requisition is in reaction to a formal notice which HIVE provided on April 2, 2019 to Genesis regarding material breaches of the Master Service Agreement ("MSA") between the parties. Initially following that notice, the Genesis representatives on HIVE's Board convened a Board Meeting to remove Frank Holmes as interim Chairman and Chief Executive Officer, but were unsuccessful. Discussions have been ongoing between HIVE and Genesis regarding the MSA for several months and the formal notice was issued after it became apparent to HIVE that the matters could not be solved through good-faith negotiation. HIVE estimates that the various breaches are valued at approximately US$50 million to HIVE. Under the MSA, unless such material breaches are cured, HIVE will have the right to terminate the MSA and applicable services orders for cause, which will lead to the right for HIVE to require Genesis to repurchase the mining equipment.
"Discussions with Genesis for full disclosure of all costs for all mining operations have been ongoing since September 2018," said Frank Holmes, Interim Executive Chairman and Interim CEO. "We are frustrated that Genesis unilaterally gave notice of increased costs in Sweden and services under the MSA have not been 'performed in a professional and workmanlike manner in accordance with the highest industry standards' as required by the MSA. It is disappointing that Genesis has reacted by attempting to eliminate the dispute by taking control of the HIVE board but I am confident that HIVE shareholders will understand that the meeting requisition is a blatant attempt to take control of HIVE for Genesis' sole benefit to the detriment of all other shareholders".
By way of background HIVE has asked Genesis on multiple occasions to provide a review of electricity pricing in Iceland and Sweden. HIVE is entitled to be charged Genesis' cost for power pursuant to the MSA but despite numerous requests, Genesis has failed to provide full information as to whether HIVE is being charged Genesis' cost for power in Iceland and Sweden. This despite unilateral increases to power charges to HIVE issued by Genesis.
In the face of Genesis' actions to the contrary, HIVE will continue to protect and promote the interests of HIVE shareholders. HIVE is actively seeking alternative service providers to Genesis to provide transparency and superior value to HIVE and its shareholders, and in particular with respect to HIVE's equipment and operations in Sweden which have recently become dormant through the course of the dispute with Genesis.
About HIVE Blockchain Technologies Ltd.
HIVE Blockchain Technologies Ltd. is a growth oriented, TSX.V-listed company building a bridge from the blockchain sector to traditional capital markets. HIVE is strategically partnered with Genesis Mining Ltd. to build the next generation of blockchain infrastructure. HIVE owns state-of-the-art GPU-based digital currency mining facilities in Iceland and Sweden, which produce newly minted digital currencies like Ethereum continuously as well as cloud-based ASIC-based capacity which produces newly minted digital currencies like Bitcoin. Our deployments provide shareholders with exposure to the operating margins of digital currency mining as well as a growing portfolio of crypto-coins.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Except for the statements of historical fact, this news release contains "forward-looking information" within the meaning of the applicable Canadian securities legislation that is based on expectations, estimates and projections as at the date of this news release. "Forward-looking information" in this news release includes information about the dispute with Genesis, including potential outcomes and quantum of recoverable damages; the requisition of shareholders meeting by Genesis and potential outcomes; the Company's ability to continue operations (including resuming operations in Sweden or otherwise profitably utilizing its equipment) without Genesis; alternative service providers to HIVE; the Company's long term growth of the Company; the business goals and objectives of the Company, and other forward-looking information includes but is not limited to information concerning the intentions, plans and future actions of the parties to the transactions described herein and the terms thereon.
Factors that could cause actual results to differ materially from those described in such forward-looking information include, but are not limited to, the ongoing dispute with Genesis may not be resolved in a timely manner or to HIVE's advantage; the requisitioned meeting and resulting costs of a proxy dispute may have a material adverse effect on HIVE; HIVE may not be able to resume operations in Sweden or otherwise profitably utilize its equipment; HIVE may not be able to secure alternative service providers to Genesis on terms that are advantageous to HIVE, or at all; the ongoing costs and distraction to management of the dispute with Genesis will have a material adverse effect on the Company; the digital currency market; the Company's ability to successfully mine digital currency; the Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on the Company's operations; the volatility of digital currency prices; and other related risks as more fully set out in the Filing Statement of the Company dated and other documents disclosed under the Company's filings at www.sedar.com.
The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking information contained in this news release, the Company has made assumptions about the Company's ability to dispute the terms of the MSA with Genesis, including material breaches and repurchase of equipment; the Copay's ability to contest a proxy dispute with Genesis; the Company's ability to engage alternate service providers to Genesis; the Company's ability to profitably liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital currencies will be consistent with historical prices; and there will be no regulation or law that will prevent the Company from operating its business. The Company has also assumed that no significant events occur outside of the Company's normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
SOURCE HIVE Blockchain Technologies Ltd.
For further information: Frank Holmes, Tel: (604) 664-1078