Givex Information Technology Group Limited's Largest Independent Shareholder, Inter.Act Venture Fund Inc., Requisitions Special Meeting to Address Failures in Operations, Governance Concerns and Further Entrenchment Tactics
- Share price has dropped more than 40% since it was listed in December 2021
- Immediate action is required to stop the destruction of value
- Appointment of new director in light of Inter.Act's efforts appears to be an admission of failure and further shows entrenchment and that change is needed
- A new director from the largest independent shareholder will ensure that all shareholder interests are represented
TORONTO, Nov. 2, 2022 /CNW/ - Inter.Act Venture Fund Inc. ("Inter.Act"), the largest independent shareholder of Givex Information Technology Group Limited ("Givex" or the "Company") (TSX: GIVX) holding over 15% of the outstanding common shares of the Company ("Shares") has requisitioned a special meeting of shareholders of Givex ("Shareholders") to stop the erosion of share value and give long-ignored Shareholders a voice. Inter.Act is putting forward an experienced director to add an independent voice to the board of directors of Givex (the "Board") and provide Shareholders with the opportunity to hold the Board accountable.
"We, like other shareholders remain concerned about the strategic direction of Givex. Given the nose dive in share value, it is time for the Board to demonstrate humility and listen to the voices of shareholders. The failure of the current leadership on both fronts has forced us to call a shareholders' meeting—at great cost—to give shareholders a voice", said Marc Ladouceur, a representative of Inter.Act.
Givex completed a very costly go-public transaction at the end of 2021. The apparent result was to balloon costs, including share-based compensation expenses of almost $5.7 million in the first six months of 2022. Cash flow from operations continue to decline, with less than $500 thousand generated in the first half of 2022 compared to nearly $3 million in the first half of 2021. While revenue appears to be up, the increase appears to be predominantly due to costly acquisitions, which have caused a further explosion in expenses moving Givex from a barely profitable company to one run at an enormous $6.5 million loss for the 6-month period ending June 30, 2022.
The Company's stock continues to steadily decline. Shareholders have lost more than 40% since the Company was listed on the TSX in December 2021. This decline reflects the downward spiral in the Company's profitability. As announced by the Company in its press release dated August 9, 2022 regarding its financials for the first six months of 2022, "Adjusted EBITDA1 was $2.3 million in 2022 compared to $3.2 million in 2021".
Given this abject performance and leadership's determination to ignore the Shareholder base, it is little wonder that Givex's stock price has gone straight down. Company shares are illiquid with approximately $15,000 in trades per day.
Inter.Act believes that the Board's strategy continues to be value destructive and an immediate change is required to preserve the limited remaining Shareholder value and introduce a plan to reverse the tide.
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1 Adjusted EBITDA is defined as net profit (loss) excluding interest, taxes, depreciation and amortization ("EBITDA") as adjusted for share-based compensation and related expenses, foreign exchange gains and losses and transaction-related expenses including those related to going public. |
For months, Inter.Act has been attempting to engage Givex in dialogue to address Shareholder concerns, including advocating for a new independent director to be appointed to the Board to be a voice for Shareholders. Don Gray and the rest of the Board have failed to address these issues, and instead, in the face of their largest Shareholder potentially requisitioning a meeting, chose to limit the avenues of change by unilaterally appointing a director of their choosing, Divya Kulkarni. This appointment was carried out without any consultation or consideration from its largest independent Shareholder, which has continued to advocate for the interests of Shareholders.
While Inter.Act believes the Board's actions are an admission of their failures, it is unfortunate that Don Gray and the rest of the Board chose to go about it in a secretive manner and without consultation, consideration or discussions from or with Inter.Act. Givex has left Inter.Act and its Shareholders with no other choice but to believe this appointment is yet another tactic by the Board to both disregard and silence Shareholders and further entrench itself.
The Board's continued efforts to avoid communicating with Shareholders demonstrate that additional changes to management are required in order to prevent further erosion of Company value.
The status quo is unacceptable. Waiting for the market to "correct" itself is not a strategy. Having been rebuffed in its numerous attempts to engage the Board productively, Inter.Act is now publicly requesting that the current Board size be increased in order to add Marc Ladouceur (the "Nominee") as a new director to give a voice to Shareholders and grow Company value. Mr. Ladoucer will ensure that these concerns are addressed and that all Shareholder interests—and not just some—are represented on the Board.
Inter.Act is also seeking:
(1) |
a "say-on-pay" vote for Shareholders to reject the Board's current unjustified approach to executive compensation; |
(2) |
the creation of an ethics committee to guide and ensure the ethical conduct of the Company's business; and |
(3) |
the creation of a special committee to undertake a strategic review of the Company to explore all alternatives to preserve and enhance Shareholder value. |
In light of the ongoing destruction of value and the Board's continued entrenchment, Inter.Act will be requesting that the Company schedule the special meeting promptly.
Inter.Act Inc., a long time investor in Givex, remains, as it has done for the last decade, faithful in the fundamentals of the Company and that Mr. Ladouceur, as the Nominee of the largest independent shareholder of Givex, can initiate change and be a positive force to represent Shareholders and drive value at the Company. The Nominee has over twenty years of experience in leadership positions with Inter.Act investing in technology and consumer goods industries and will bring this experience to the Board. Moreover, Mr. Ladouceur knows the Company well, having been a director of Givex Corporation prior to its go-public transaction and therefore can immediately get to work for Shareholders following his appointment.
Information Concerning the Nominee:
Mr. Marc Ladouceur has served as Secretary Treasurer of Inter.Act since November 2015, and prior to that date, served as Chief Operating Officer since January 2001. Inter.Act is a private equity fund that has made numerous investments in the technology and consumer goods industries over the past 20+ years. Prior to his current role at Inter.Act, Mr. Ladouceur was the V.P. Finance of M.A.C. Cosmetics. Mr. Ladouceur has served on the boards of a number of private companies and not-for profit organizations.
Mr. Ladouceur obtained a Bachelor of Business Administration from Wilfred Laurier University in 1984 and an MBA from the Rotman School of Management, University of Toronto in 2004. Further, Mr. Ladouceur has obtained both the Chartered Professional Accountant (CPA) and Institute of Corporate Directors, Director (ICD.D) designations.
Name and Province/ State and Country of Residence |
Present Principal Occupation, Business or Employment |
Number of Common Shares Beneficially Owned |
Marc Ladouceur Ontario, Canada |
Secretary Treasurer of Inter.Act Venture Fund |
Nil |
While Mr. Ladouceur currently does not hold any Shares, Inter.Act holds 18,630,660 Shares.
Marc Ladouceur, on behalf of Inter.Act, welcomes the opportunity to engage with fellow Shareholders. Mr. Ladouceur can be reached at 416-473-4070 or [email protected].
Advisors
Norton Rose Fulbright Canada LLP are acting as legal advisors to Inter.Act Venture Fund Inc.
Information in Support of Public Broadcast Solicitation
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 Inter.Act has delivered the requisition, there is currently no record or meeting date set for the meeting and Shareholders are not being asked at this time to execute a proxy in favour of the Nominee or any other resolution set forth in the requisition. In connection with the meeting, Inter.Act may file a dissident information circular in due course in compliance with applicable securities laws.
Notwithstanding the foregoing, Inter.Act is voluntarily providing the disclosure required under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations ("NI 51-102") in accordance with securities laws applicable to public broadcast solicitations. In connection therewith, certain information regarding, among other things, the Nominees has been provided in this press release under the sections entitled "Information Concerning the Nominee".
The information contained herein and any solicitation made by Inter.Act in advance of the meeting is, or will be, as applicable, made by Inter.Act and not by or on behalf of the management of Givex. All costs incurred for any solicitation will be borne by Inter.Act, provided that, subject to applicable law, Inter.Act may seek reimbursement from Givex of Inter.Act's out-of-pocket expenses, including proxy solicitation expenses and legal fees, incurred in connection with a successful reconstitution of the Board.
Inter.Act is not soliciting proxies in connection with the meeting at this time. Inter.Act may engage the services of one or more agents and authorize other persons to assist in soliciting proxies on behalf of Inter.Act. Any proxies solicited by or on behalf of Inter.Act, including by an agent, may be solicited pursuant to a dissident information circular or by way of public broadcast, including through press releases, speeches or publications and by any other manner permitted under Canadian corporate and securities laws. Any such proxies 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 Givex is located at 301-1665 Ellis Street Kelowna, British Columbia Canada, V1Y 2B3. A copy of this press release may be obtained on the Company's SEDAR profile at www.sedar.com.
SOURCE Inter.Act Venture Fund Inc.
Investor Contact: Marc Ladouceur, Office: 416-473-4070, [email protected]
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