Leading Independent Proxy Advisor Indicts Liquor Stores N.A. for Vote Buying Scheme

  • Glass Lewis highly critical of vote buying scheme, calling it "an inappropriate use of shareholder capital and a violation of basic corporate governance principles"
  • Encourages shareholders NOT to vote for Chairman "in order to convey a strong rebuke of [vote buying] behavior"
  • Shareholders are reminded the deadline to vote their BLUE proxy is 5:00 p.m. (Toronto time) on June 15, 2017. Even if you have never voted before, your BLUE proxy vote can make a difference. Kingsdale Advisors can help you vote today at 1-877-657-5857 or at contactus@kingsdaleadvisors.com

CALGARY, June 14, 2017 /CNW/ - PointNorth Capital Inc., together with certain affiliates and associates (collectively, "PointNorth"), announces a second leading independent proxy advisory firm Glass, Lewis & Co., LLC ("Glass Lewis") has said change is needed at Liquor Stores N.A. Ltd. ("Liquor Stores" or the "Company") starting with the replacement of the Chairman.  Last week, Institutional Shareholder Services Inc. ("ISS") also agreed change is needed.

Changing the Chairman alone is not enough to effect meaningful change from the current Board's status quo.  Only by electing PointNorth's full team of six nominees can shareholders be assured of real change. 

VOTE BUYING SCHEME INDICTED

Glass Lewis indicted the Chairman for orchestrating Liquor Stores' vote buying scheme, designed to pay brokers for shares voted in favour of Liquor Stores' nominees provided all its nominees are elected:

"Ultimately, we view the board's authorization of this vote-buying scheme, in which the Company intends to use its scarce capital to pay investment advisers only if their retail clients vote to re-elect all current directors, as an inappropriate use of shareholder capital and a violation of basic corporate governance principles.

The severity of our concern on this issue rises to a level which we believe warrants holding the board accountable for acting in such a manner that, in our view, is inconsistent with basic shareholder rights and interests.

Given that the scheme appears to have been approved by the entire board, and that the chairman of the board… has been quoted in the Company's press releases defending the scheme and otherwise leading the charge in this proxy contest, we believe shareholders should withhold votes from [the Chairman] in order to convey a strong rebuke of such behavior."

PointNorth has filed an application with the Alberta Securities Commission (the "ASC") for an order:

  • halting all payments under the vote-buying scheme;
  • terminating the agreements establishing the vote-buying scheme; and
  • reprimanding the Board of directors of Liquor Stores for approving a vote-buying scheme designed to entrench the current Board.

PointNorth has the support of LOGiQ Institutional Partners, JC Clark Ltd. and other institutional shareholders and a significant number of retail shareholders for its nominees.  PointNorth feels strongly that vote buying in support of board entrenchment is an improper defensive tactic for boards to use in opposition to shareholder initiated changes to board composition.

GLASS LEWIS CONFIRMS CURRENT BOARD'S PLAN HAS HURT SHAREHOLDERS

Prior to PointNorth meeting with the current Board and stressing the need for urgent action, no plan was in place to address issues related to costs, inventory, store upgrades and an enterprise resource planning (ERP) system.  While Glass Lewis incorrectly credits the current Board for recent changes, it does note the status quo approach has failed shareholders:

"We believe the Dissident has highlighted certain aspects of the Company's operational and financial performance which are concerning and have contributed to the Company's delivery of inferior returns for shareholders."

"Liquor Stores' relative TSR performance, particularly since the announcement of management's current strategic plan, indicate that this plan has generated insufficient returns for shareholders and may need refinement, if not overhaul."

PointNorth appreciates Glass Lewis' recognition that a catalyst for positive change is needed. The only way to achieve this is by electing the six new, independent directors proposed by PointNorth. For shareholders, change from the status quo means that the recent turnaround in the Company's share price that started when PointNorth announced its ownership will continue. It is anticipated that the new Board will maintain the existing dividend policy and review it regularly for opportunities to increase it.

WARNING: Shareholders who receive a call from their broker to vote the WHITE proxy for management should be aware that their broker is being paid by Liquor Stores' current Board to get their vote.

We encourage all shareholders who have a financial advisor or broker to call them and ask if they have agreed to Liquor Stores' vote buying scheme and, if so, how they reconcile that with the trust that has been placed in them.

It is time for a change. Shareholders can do better. Every vote will count no matter how many shares you own.

Vote the BLUE proxy form or BLUE voting instruction form for the six new director nominees before 5:00 p.m. (Toronto time) on June 15, 2017. Even if you have voted the WHITE proxy, it is not too late. A later-dated BLUE proxy will replace any previously voted WHITE proxy.

If you have questions or need help voting, contact Kingsdale Advisors at 1-877-657-5857 or at contactus@kingsdaleadvisors.com.  For more information visit www.FixLIQ.com.

About PointNorth Capital

PointNorth, together with its affiliates and associates, is a private equity investment firm formed in Ontario. PointNorth invests, as did its predecessor, in equity and debt situations where it is able to influence operational, financial and strategic direction.

PointNorth invests in companies that are experiencing financial or operational challenges, are in out-of-favour sectors or are otherwise in need of change to drive significant long-term value for stakeholders. PointNorth does not seek to appoint its founders and principals to the boards of directors of companies it invests in, but rather operates by identifying best-in-class independent candidates to nominate for board positions. This commitment to improvements benefits all shareholders, not just PointNorth.

PointNorth has developed the New Strategy for Liquor Stores with the input of third party alcohol retail industry experts. As at April 21, 2017, PointNorth beneficially owned or controlled or directed, directly or indirectly, an aggregate of 2,750,000 common shares, representing approximately 9.91% of the common shares in the capital of Liquor Stores.

About Glass, Lewis & Co., LLC

Glass Lewis is the leading independent provider of global governance services, helping institutional investors understand and connect with the companies they invest in. Glass Lewis empowers more than 1,200 institutional investors to make sound voting decisions at more than 20,000 meetings a year by uncovering and assessing governance, business, legal, political and accounting risks at issuers domiciled in 100 countries.

Forward-Looking Statements and Information

Certain statements contained in this press release, constitute forward-looking statements. The words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to Liquor Stores or PointNorth are intended to identify forward-looking statements. Such statements reflect PointNorth's current views and intentions with respect to future events as well as assumptions made by and information currently available to PointNorth, and are subject to certain risks and uncertainties. Although PointNorth considers these assumptions to be reasonable based on the information currently available to it, many factors could cause the actual results, performance, actions or achievements of Liquor Stores or others that may be expressed or implied by such forward-looking statements to materially differ from those described herein should one or more of these risks or uncertainties materialize. Such factors include, but are not limited to, economic, business, competitive and regulatory factors. Readers are cautioned not to place undue reliance on forward-looking statements.

The forward-looking statements contained herein are expressly qualified by this cautionary statement and are made as of the date of this press release. Except as expressly required by law, PointNorth does not intend, and disclaims any intention or obligation to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Liquor Stores' registered office address is Suite 101, 17220 Stony Plain Road, Edmonton, AB Canada T5S 1K6. A copy of this press release may be obtained on Liquor Stores' SEDAR profile at www.sedar.com.

SOURCE PointNorth Capital Inc.

For further information: Ian Robertson, Executive Vice President, Communication Strategy, Kingsdale Advisors, Direct: 416-867-2333, Cell: 647-621-2646, Email: irobertson@kingsdaleadvisors.com

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