Open Letter to Fellow Shareholders of Reitmans (Canada): Board Refresh, Proper Governance and Exchange Listing Graduation

TORONTO, May 13, 2025 /CNW/ - Concerned shareholders (the "Concerned Shareholders") of Reitmans (Canada) Limited ("Reitmans" or the "Company") are calling for immediate action at Reitmans to halt and reverse the ongoing governance concerns and stagnation of shareholder value 

To our Fellow Shareholders

We believe that the Board of Directors (the "Board") of Reitmans must take the following significant and immediate steps to address critical issues;

• In light of the consistently poor decision making at Board level, the Company must adopt and ensure an appropriate governance framework is in place to address the current dominance of the Executive Chairman, Stephen Reitman
• The removal (and replacement) of non-executive Directors, Bruce Guerriero and Daniel Rabinowicz due to independence issues and a clear misalignment with the interests of all shareholders
• The collapsing of the dual class share structure and graduating from the TSX Venture Exchange to the Toronto Stock Exchange

We, as concerned shareholders of the Company hereby demand the Board take steps to address the chronically low valuation of the Company's shares. We believe that the number of shareholders who share our concerns already constitute a very large portion of the total shareholder base and continues to grow. Yet, our numerous requests to engage in dialogue with the Board as a means to unlocking value for all of the Company's shareholders have been consistently ignored as a result of the Executive Chairman, Stephen Reitman's complete dominance over Board members.

We will no longer accept the poor decisions being taken at the Board level that have resulted in the persistent undervaluation of our investment. We are united in our commitment to ensuring swift and concise steps are taken by the Board that result in the market awarding the Company with an appropriate valuation and we wish to assure investors that we are committed to doing so without any interference in the Company's operations and without influencing the majority voting interests of the founding family.

Below we outline what we believe is a reasonable and effective proposal to unlock value for all shareholders of the Company, including the founding family, assuming that the founding family's interests are aligned with those of minority shareholders, and that they too wish to ensure the market recognises the true valuation of the Company and do not focus instead on receiving a premium for their shares over the non-voting equivalents in the event of a takeover.

Background

Reitmans, a well-established Canadian retailer, is currently listed on the TSX Venture Exchange ("TSXV"), a junior market typically suited for emerging companies. Despite its strong brand, operational history, and balance sheet strength, the Company's enterprise value is negative, meaning its market capitalization is less than its net cash position. Such a valuation is generally reserved for companies who generate negative free cash flow.

As of 12 May 2025 Reitmans' market capitalization is C$105 million while its net cash stands at C$158 million. It is also worth noting that its net book value is approximately C$280 million. This extraordinary situation has arisen from continuous poor decision making at Board level and we, as minority shareholders, cannot allow this to continue

Ongoing Issues

The persistent undervaluation of Reitmans' shares is wholly self-inflicted and raises several critical issues:

1.	Equity Valuation: The current market price significantly underrepresents the Company's intrinsic value, including its net assets, operations and future potential.
2.	Limited Investor Reach Having a dual class share structure and listing on the TSXV reduces visibility and attractiveness to large institutional investors who typically focus on senior exchanges. Roughly 90% of large Canadian institutional funds do not have the mandates to hold TSXV-listed securities, thus limiting the potential investors for the Company's shares. Currently no sell side analysts cover Reitmans, as has been the case for several years despite our best efforts to encourage the company to address this. David Kassie, former Chairman of Canaccord Genuity Group, a broker and investment bank, has sat on the Board for 14 years and yet, as the Board's Capital Markets expert, he does not appear to have ever been vocal on the need for the likes of Canaccord and other brokers to publish research on the Company and thus opening the investment case to a wider audience. It is also concerning that, as disclosed by the Company in its 2024 management information circular, David Kassie, the Board's Capital Markets expert, had the lowest attendance rate of any Board member who served during the full fiscal year 2024.
3.	Board Inaction & Executive Chairman Dominance: Despite the consistent chronic undervaluation of the Company's equity, the current Board refuses to take any significant and appropriate steps to secure a fairer price for the Company's shares and instead it continues to focus on capital allocation policies that are destructive to shareholder value such as;
	a.	the most recent announcement on 10 April 2025 of large capital expenditure on speculative growth whilst a large buyback of the Company's shares represents a far more compelling return.
	b.	The previously announced minuscule share buyback that appears to be nothing more than a facility to allow staff to sell exercised options into the open market and/or ensure no dilution of the economic rights of the founding family's stake from the exercise of options

In addition, the total remuneration and share options awarded ($900,649 in 2024) to Executive Chairman, Stephen Reitman, since taking this position is far in excess of what one would expect for a company of this size. These numbers would be difficult to justify in a high-growth public tech firm, let alone a beaten down, underperforming, TSXV-listed retailer. Since emerging from its restructuring proceedings under the Companies' Creditors Arrangement Act (Canada) ("CCAA") in January of 2022, a process where creditors compromised a significant portion of their debt, the Executive Chairman, who at that time was Chief Executive Officer, was awarded 500,000 shares, over 50% of the 940,000 shares allotted on April 26, 2022, less than 4 months after exiting CCAA proceedings. This fact we are sure has not been lost on the creditors who lost over $90 million dollars during the process. Stephen was also awarded far more shares than what Andrea Limbardi, the Company's first external Chief Executive Officer, received, being 327,689 shares. Not only was Ms. Limbardi awarded less shares upon joining, her shares vest over four years while Stephen Reitman's shares vest in three. Moreover, this is a particularly concerning strategy for Stephen Reitman to take as controlling shareholders do not typically award themselves with excessive options as they already hold enough vested interest in the company's success via existing holdings. Furthermore, given the appalling share price performance under his tenure as Executive Chairman, there should be absolutely no reason for any large option awards.

We see this as classic corporate excess and behaviour that reflects an opportunistic approach to governance by the Executive Chairman to extract personal value from the Company as opposed to focusing on creating value for all shareholders.

Proposal

To address this unacceptable situation, we are proposing the following steps be taken by the Board:

1.	Collapse Dual Class Structure: Reitmans collapse its dual class share structure and pursue a graduation to the Toronto Stock Exchange ("TSX"), Canada's premier stock exchange. Notwithstanding the significant issues we have flagged that are plaguing the Company we propose a targeted buyback to ensure the founding family is able to maintain voting control of the Company. The return on this buyback would represent an IRR in excess of 100%, a far greater use of the Company's cash pile than pursuing largescale speculative growth as was announced by the Company on 10 April 2025. We steadfastly believe that this step would unlock significant benefits for the Company and its shareholders allowing the following to happen:
	Increased Visibility: A TSX listing would elevate Reitmans' profile among investors, sell side analysts, and the Canadian financial community. Access to Institutional Investors: Many large institutional investors, restricted to TSX-listed companies, would gain the opportunity to invest in Reitmans, thus significantly broadening the potential shareholder universe. Enhanced Liquidity: Higher trading volumes on the TSX should result in more efficient price discovery, leading to a fairer and more accurate valuation of shares. Strategic Advantage: A stronger market position would provide Reitman's with greater flexibility for growth and value-enhancing opportunities. We are confident that Reitmans meets the TSX listing requirements and that graduation represents a practical and impactful solution to the current valuation crisis.
2.	Board Refresh: Minority shareholders have consistently lacked representation on the Board for years. Moreover, we believe that the Executive Chairman has and continues to exert total dominance over the Board's decision-making. We intend to vote against the reappointment of Bruce Guerriero and Daniel Rabinowicz at the upcoming shareholders' meeting scheduled for June 18 2025 (the "Meeting") and to put forward two alternative independent Board nominees who will ensure that minority shareholders are represented appropriately.
	The reasons for our decision to vote against these reappointments are as follows;
	Questionable independence as both had existing relationships with Reitman's as external consultants prior to being appointed to the Board. Members of the Concerned Shareholders met with Stephen Reitman in 2024 and he was unaware that Bruce Guerriero was head KPMG Partner on the Reitman's audit from 2007-2013 prior to his appointment to the Board in 2016. It is extremely concerning that the Executive Chairman is not aware of potential conflicts on the Company's Board.  Miniscule shareholdings indicating that their interests are not aligned with those of all shareholders.   According to public filings, Bruce Guerriero holds 2,500 common shares despite annual Directors fees of C$100,000 and Daniel Rabinowicz holds only 6,500 class A shares despite annual Director's fees of C$95,000 – this is a startlingly low level of share ownership by non executive Directors of a publicly-listed company, especially in light of such long tenures of 9 and 13 years respectively. Clearly these Directors have little interest in seeing the Company's shareholders be awarded with an appropriate valuation given the lack of appropriate action over recent years at Board level. If they held material positions in the Company, then we would have more confidence that their interests were aligned with all shareholders and not just those of the founding family. We also note that according to public filings, Anita Sehgal, another non-executive Director, does not hold any equity since her appointment in 2021 almost 4 years ago despite annual Director's fees of $75,000, again highlighting the lack of alignment of interests at the Board level with those of minority shareholders.
	The Canadian Coalition for Good Governance recognizes the importance of aligning Board and shareholder interests, and guides that appropriate Board share ownership policies should reflect the below.
	"Boards should establish a minimum shareholding for directors, perhaps based on a multiple of their annual compensation. The minimum threshold of shares should be held by directors for a minimum of one year after retirement or resignation from the board." "Minimum formal shareholder requirements for directors (achievable over a predetermined time frame) establish and maintain an alignment of interests between directors and shareholders by requiring directors to have a meaningful investment in the company." Failed tenures as neither of the two non-executive Directors have, in our view, demonstrated an ability to steer the Board into making decisions that are in the best interests of all shareholders and not just those of the founding family. Mr. Guerriero and Mr. Rabinowicz have served in their roles for 9 and 13 years, respectively, a period marked by poor decisions at Board level that have resulted in shareholders being in the appalling situation we are in today.

Call to Action

If, as a fellow shareholder, you agree with the concerns and proposed changes we have outlined above and wish to contact us, you may do so at [email protected] 

Together, we are hopeful that we can explore and enact on all options to ensure the Board act decisively and in the interests of all shareholders and thereby securing the fair value we feel Reitmans equity deserves.

Additional Information

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 there is both a record and meeting date set for the Meeting, shareholders are not being asked at this time to execute a proxy in favour of any resolution that may be considered at the Meeting. In connection with the Meeting, the Concerned Shareholders may file a dissident information circular in due course in compliance with applicable corporate and securities laws.

Notwithstanding the foregoing, the Concerned Shareholders are voluntarily providing the disclosure required under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations ("NI 51-102") and section 150(1.2) of the Canada Business Corporations Act in accordance with Canadian corporate and securities laws applicable to public broadcast solicitations.

The information contained herein and any solicitation made by the Concerned Shareholders in advance of the Meeting is, or will be, as applicable, made by the Concerned Shareholders and not by or on behalf of the management of Reitmans. All costs incurred for any solicitation will be borne by the Concerned Shareholders, provided that, subject to applicable law, the Concerned Shareholders may seek reimbursement from Reitmans of the Concerned Shareholders' out-of-pocket expenses, including proxy solicitation expenses and legal fees, incurred in connection therewith.

The Concerned Shareholders are not soliciting proxies in connection with the Meeting at this time. The Concerned Shareholders may engage the services of one or more agents and authorize other persons to assist in soliciting proxies on behalf of the Concerned Shareholders. Any proxies solicited by or on behalf of the Concerned Shareholders may be solicited pursuant to a dissident information circular sent to shareholders, after which solicitations may be made by or on behalf of the Concerned Shareholders, by mail, telephone, fax, email or other electronic means as well as by newspaper or other media advertising, and in person by directors, officers and employees of the Concerns Shareholders, who will not be specifically remunerated therefore, 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.

The Concerned Shareholders are not requesting that shareholders submit a proxy at this time. If and when the Concerned Shareholders commence a formal solicitation of proxies in connection with the Meeting, 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 Concerned Shareholders, being Donville Kent Asset Management Inc., Parma Investments Limited and a private investor, collectively own 5,576,835 class A shares and 1,193,800 common shares of the Company.

The Company's principal business office is located at 250 Sauvé Street West, Montreal, QC H3L 1Z2.

SOURCE Concerned shareholders of Reitmans (Canada) Limited

Investor and Media Contact: DONVILLE | KENT, Asset Management Inc., [email protected], 40 King Street W, Suite 6202, Toronto, Ontario M5H 3Y2