Cites serious deficiencies in Boss's public disclosure
Calls for immediate resignation of the board
VANCOUVER, Sept. 17, 2013 /CNW/ - Morning Star Resources Ltd. (the "Concerned Shareholder") today responded to various misleading statements contained in Boss Power Corp.'s news release disseminated on September 12, 2013. It is obvious that Boss's board is interested in rewriting history. The Concerned Shareholder wishes to correct the record.
The B Claims
The truth behind the B Claims is simple. Boss does not own the B Claims. Boss knows that it held (and holds) the B Claims in trust for the beneficial owner, Mr. Beruschi, the president of the Concerned Shareholder. Boss included the B Claims in the $30 million settlement without informing Mr. Beruschi or obtaining his consent, contrary to the express trust obligations under which Boss held title to the B Claims.
In fact, certain members of Boss's management involved in the settlement concealed this fact from Mr. Beruschi when he specifically inquired why the Province was insisting on delivery of his B Claims before paying out the settlement. It was not until approximately 2 months after the settlement in mid-December 2011 that Mr. Beruschi was partially informed by Boss's management that his B Claims had been wrongfully included in the settlement by Boss.
Not only did Mr. Beruschi have the right to know the truth as the beneficial owner of the B Claims, but also as a director of Boss at the time. It is alarming that this information was purposely kept from him. Mr. Beruschi was not the only one kept in the dark though. Boss only first advised its shareholders of the necessity of delivering the B Claims in a news release in May 2012 - A FULL SEVEN MONTHS AFTER THE SETTLEMENT.
Boss's recent attempts to paint Mr. Beruschi as opportunistic are just more desperate examples of the board trying to manipulate shareholders to gain support in advance of the looming shareholders' meeting. The simple truth is that the current board, led by Ron Netolitzky, appears more interested in enabling its largest shareholder, Anthem Resources Inc., to get the best possible financial result to the detriment of all other shareholders. Ron Netolitzky is not only the chairman and CEO of Boss, but he is also a director, former President and CEO and a significant shareholder of Anthem.
Boss's last offer to Mr. Beruschi to obtain the B Claims was over thirteen months ago in July 2012. After that, Mr. Netolitzky negotiated on behalf of Anthem. For example, before Boss's failed March 2013 court application, Mr. Netoltizky made an offer, on behalf of Anthem, that required Boss to make a $1.0 million payment to Anthem for a royalty that Mr. Netolitzky acknowledged Anthem had not earned, and could not earn. This was clearly not in Boss's best interest. "It seems that Boss's board is run by a chairman and CEO that is more motivated to set the stage for Anthem to score an unearned windfall than protecting the interests of all shareholders," Mr. Beruschi stated. Most recently, the Concerned Shareholder understands that Boss's chief outside "mediator" was hired to negotiate on behalf of Anthem. Boss and Anthem also share the same CFO. "The conflict is blatant and obvious," stated Mr. Beruschi. "These are facts that the board just can't ignore or hide. Shareholders should immediately demand accountability," Mr. Beruschi added.
In previous news releases, the Concerned Shareholder informed its fellow shareholders that they were being misled by Boss's board through the dissemination of inaccurate (or in some cases no) information. Boss's recent suggestions that it is working with the Province to have the $30 million settlement proceeds paid into Court is another example. The truth is that THE PROVINCE (and the Province only) is seeking an order to have the settlement proceeds paid into Court pending the Court's decision as to each party's entitlement. However, BOSS IS ONLY TELLING SHAREHOLDERS PART OF THE STORY. What Boss is intentionally keeping from shareholders is that if the Court rejects the Province's application on this ground, the Province is alternatively asking the Court to SET ASIDE THE $30 MILLION SETTLEMENT.
If the Province is successful, the $30 million settlement will be lost. Boss will have to return to a lengthy, expensive trial, where it risks getting nothing for its claim.
WHY HAS BOSS MANAGEMENT NOT INFORMED SHAREHOLDERS OF THE IMMINENT RISK TO THE $30 MILLION SETTLEMENT? WHY IS THIS CRUCIAL INFORMATION BEING PURPOSELY KEPT FROM SHAREHOLDERS?
Mr. Beruschi stated: "Boss's shareholders deserve to know the whole story. It is fundamental for the board of a public company to immediately inform shareholders of any events that could affect their investment. Then how can the Boss board justify concealing such vital information from the very people whose interests it is there to serve? What is clear is that Boss's management has had critical information concerning the Province's application for over 13 months, but purposely hid it from shareholders."
Immediate Board Resignations to Close Settlement
As part of its public relations campaign, Boss's board has repeatedly tried to smear the Concerned Shareholder. In its news release, the board went as far as claiming that Mr. Beruschi had refused to agree to allow Boss to deliver title to the B Claims to the Province. That is just not true. The Concerned Shareholder has made numerous fair and reasonable proposals privately to the board to allow it to deliver the B Claims to the Province under the settlement, all of which have been rejected or ignored. Mr. Beruschi's last proposal to the board was in August 2013. The board's last offer to Mr. Beruschi was over 14 months ago in July 2012.
Mr. Beruschi stated: "After 23 months, it has reached a point where I cannot, in good conscience, deal with a board that has for years deceived and manipulated me and other shareholders, and is being run by Mr. Netolitzky for the benefit of Anthem at the risk of the settlement. This result cannot be good for any of Boss's minority shareholders." In order to move forward, the Concerned Shareholder believes that, at a minimum, Ron Netolitzky and John Bowles must be replaced with two independent directors to be nominated by the Concerned Shareholder with no interest in the settlement. The appointment of such directors can help ensure that the settlement proceeds are protected for the benefit of everyone. "Once the independent directors are appointed, I am confident that a deal will be promptly reached to allow delivery of the B Claims to close the settlement and allow the funds to be paid into Court. Mr. Netolitzky and Mr. Bowles should take the right course of action by immediately starting the transition to a new independent board without further squandering shareholders' time and money," said Mr. Beruschi.
Information on the names and backgrounds of the Concerned Shareholder's proposed director nominees, as well as detailed reasons to support the Concerned Shareholder's position, will be more fully described in a detailed information circular to be mailed to shareholders and filed on SEDAR in due course in advance of the November 14, 2013 shareholders' meeting.
SOURCE: Morning Star Resources Ltd.
For further information:
Anthony J. Beruschi
Morning Star Resources Ltd.
Telephone: (604) 417-3657