Rea Holdings to nominate five highly-qualified directors to transform Martinrea

• Led by key industry veterans, the Nominees will build a leading, focused automotive technology company.
• Will provide effective management oversight, improve operational and financial performance, reinforce financial controls, repair Martinrea's overlevered balance sheet, and enhance customer relationships.
• Nominees have extensive backgrounds and proven expertise in the automotive industry, finance and accounting, financial control, corporate governance, human resources,  and supply-chain management.

TORONTO, April 3, 2014 /CNW/ - Rea Holdings Inc., a shareholder of Martinrea International Inc. ("Martinrea" or the "Company") (TSX: MRE) announced today that it intends to nominate five highly-qualified directors (the "Transform Martinrea Nominees" or the "Nominees") for election to Martinrea's board of directors at the upcoming 2014 annual meeting of shareholders. Each of the Nominees has an important strategic role to play in the transformation of Martinrea.

The Nominees, acting as independent fiduciaries, are committed to transforming Martinrea into a global market leader in the automotive manufacturing and technology industry and restoring value to shareholders. The Nominees contribute their respective backgrounds and expertise in the automotive industry, finance and accounting, financial control, corporate governance, human resources, and supply-chain management.

The Nominees draw their experience from senior leadership positions with leading Canadian and international companies, including: Magna International (TSX: MG), Equity Financial Holdings (TSX: EQI), VIA Rail, Deloitte, and Martinrea (TSX: MRE).

"Martinrea shareholders need a board that can provide thoughtful and effective leadership and management oversight," said Manfred Gingl, a Transform Martinrea Nominee. "We will bring the strategic and technical skills necessary to strengthen the Company's core business and transform Martinrea into a leader in automotive manufacturing and technology."

"I cannot think of anyone who can command the respect of customers at all levels like Mr. Gingl. It is an honour to serve on this slate of nominees," said Nat Rea, a Transform Martinrea Nominee. "We are committed to the highest principles of good governance. We intend to select a board chair who is a proven leader in the automotive industry, with decades of experience and a track record of creating shareholder value," continued Mr. Rea.

REA HOLDINGS' INDEPENDENT AND EXPERIENCED BOARD NOMINEES

• Manfred Gingl – Mr. Gingl is a former President, CEO, and Vice Chairman of Magna International, where he worked for 44 years.  During his tenure, Mr. Gingl oversaw its growth from a family of 41 companies to 122 companies. He is a tool and die maker and designer by trade and is known as the architect of many Magna technologies.
• Sandra Levy – Ms. Levy is a senior human resources executive with proven management expertise with major global organizations.  Ms. Levy was the former Director of Human Resources, North America and Asia, at Magna International. Ms. Levy served as a trustee of ResREIT and on the Board of Governors of York University. She is a member of the Law Society of Upper Canada.
• Roland Nimmo, CPA, CA – Mr. Nimmo was the Vice President of Internal Audit at Magna International where he supervised the financial procedures and internal controls of all global operations and played a pivotal role in Magna's Corporate Governance System. Previously, Mr. Nimmo was a partner at Deloitte in its Financial Advisory and Canadian Real Estate practices.
• Nat Rea – Mr. Rea is a tool and die maker who grew Rea International and merged it with Royal Laser Tech Corporation to form Martinrea in 2002.  He played an instrumental role in acquiring key assets for the company and served as Vice Chairman and Director from 2002-2012, overseeing its growth of revenue to $2.9B.
• Paul G. Smith, MBA, ICD.D – Mr. Smith is the Chairman of VIA Rail Canada. He co-founded Equity Financial Holdings, an OSFI-regulated publicly-traded financial institution. Prior to entering the private sector Mr. Smith worked for the Government of Canada in key Ministerial Offices, culminating in his role as the Executive Assistant to the Prime Minister of Canada.

THE CASE FOR CHANGE AT MARTINREA

Martinrea has dramatically underperformed its Canadian peer group over the past three years. The Nominees believe that the underperformance and depressed valuation of the shares is directly linked to the key issues below:

1.     A lack of effective oversight of management.

Martinrea requires effective board oversight of management. The incumbent board and management of Martinrea is deeply entrenched, with recent additions of individuals chosen to provide the appearance of board renewal. The Nominees believe that the Martinrea board must be truly independent of management, with a diversity of perspectives and relevant experience. The board requires members with: automotive manufacturing experience, including hands-on supply-chain and OEM negotiation experience, strong financial control and audit proficiency, human capital management expertise, public company board and executive experience, and a commitment to enhance shareholder value above the interests of management.

2.     Overlevered balance sheet, the highest net debt to capitalization ratio of its Canadian peer group.

Martinrea's debt has ballooned under the incumbent leadership team. Its net debt to total capitalization ratio is estimated to be approximately 43%, well in excess of the other auto parts companies (BMO Capital Markets, March 31, 2014). The Nominees believe that the Company's current debt load is unsustainable and has restricted the Company's financial flexibility. The overlevered balance sheet has also diminished the Company's capacity to weather downturns, reduced negotiating leverage with customers and has forced the company to seek equipment based financing with a potentially higher cost of borrowing.

3.     A pattern of serious operational issues.

Martinrea's incumbent board and management continue to struggle with a series of cost and operational issues that have affected product launches at multiple plants. These cost and operational issues have resulted in a write-down of assets and other extraordinary expenses. Some costs associated with new product launches are predictable and quantifiable, but the incumbent management team's inability to execute effectively demonstrates a lack of expertise. The technical competency of our Nominees will strengthen management oversight, provide strategic guidance, and assist in identifying, attracting, and retaining the technical skills required to effectively oversee the Company's operations.

4.     Identified financial control failures.

After pressure brought to bear by Nominee Nat Rea, a special committee of the board of Martinrea (the "Special Committee") retained advisors to investigate the issues raised by Mr. Rea. In the third quarter of 2013, the Special Committee reported that it identified inaccuracies in the results reported by one of its plants (Hydroform Solutions) during the period from 2005 to 2012, leading Martinrea to overstate its profits by $16.7 million in total, according to the 2013 audited Financial Statements. The Special Committee also reported that it intended to recover payments of $246,100 from the Company's former CEO. The Nominees believe that Martinrea requires much stronger financial controls, the establishment of an internal audit group independent of management reporting directly to the board, and a board that will hold management accountable.

THE TRANSFORM MARTINREA PLAN

1.     Obtain independent board representation.

Elect the five highly-qualified Transform Martinrea Nominees to the board. The Nominees are prepared to offer leadership during a time of management transition. They bring a diversity of relevant experience in automotive manufacturing, finance and accounting, financial control, corporate governance, human resources, purchasing, and supply-chain management. 

2.     Repair the balance sheet.

The Nominees intend to identify and evaluate non-core and non-strategic assets. They plan to drive earnings growth through operational efficiency and utilize that cash flow to reduce the Company's level of indebtedness. The Nominees are committed to focusing on bottom-line performance, rather than top-line growth that appears to have come at the expense of Martinrea's balance sheet. The additional flexibility afforded by repairing Martinrea's balance sheet will enable it to invest in the research and development that will be key to the high-value add manufacturing essential to the Company's future growth.

3.     Improve operational performance and reinforce financial controls.

The Nominees will ensure that management installs accountable general managers who have the technical competency, tools, resources and autonomy to perform effectively. The Company will need to rationalize head office overhead and administrative costs. Under the new board's oversight, Martinrea will develop and enforce strict internal financial controls and audit processes. Finally, compensation must be aligned with performance – emphasizing customer and employee satisfaction and bottom-line performance.

4.     Restore and enhance customer relationships.

Martinrea must re-engage with key customers, and aggressively seek out new opportunities. The Nominees have extensive experience in negotiating with and delivering to major OEMs. They intend to direct management to focus on operational efficiency and solid product launches.

REA HOLDINGS' ADVISORS

Rea Holdings has engaged Dentons Canada LLP as its legal advisor and Bayfield Strategy as its strategic and communications advisor. 

ADDITIONAL INFORMATION AND DISCLAIMERS

The head office and registered address of Martinrea International is 3210 Langstaff Road, Vaughan, Ontario, L4K 5B2. The information contained in this news release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable corporate or securities laws or otherwise. Martinrea shareholders are not being asked to execute a proxy in favour of the Nominees, although Rea Holdings may file a dissident information circular (a "Dissident Circular") in due course in connection with the next annual meeting of shareholders of Martinrea and in compliance with applicable securities laws.

Notwithstanding the foregoing, Rea Holdings is voluntarily providing the disclosure required under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations in accordance with securities laws applicable to public broadcast solicitations.

This news release and any solicitation made by Rea Holdings in advance of a meeting of Martinrea shareholders is, or will be, as applicable, made by Rea Holdings, and not by or on behalf of the management of Martinrea. All costs incurred for any solicitation will be borne by Rea Holdings.

Rea Holdings is not soliciting proxies in connection with a meeting of Martinrea shareholders at this time and shareholders are not being asked at this time to execute proxies in favour of the Nominees. Any proxies solicited by Rea Holdings will be solicited pursuant to a Dissident Circular sent to shareholders of Martinrea, after which solicitations may be made by or on behalf of Rea Holdings, by mail, telephone, fax, email or other electronic means, and in person by directors, officers and employees of Rea Holdings or its proxy advisor or by the Nominees.

Any proxies solicited by Rea Holdings in connection with a meeting of Martinrea shareholders may be revoked by instrument in writing by the shareholder giving the proxy or by its duly authorized officer or attorney, or in any other manner permitted by law.

Nominee Information

The table below sets out, in respect of each Nominee, his or her name, province, and country of residence, his or her principal occupation, business or employment within the five preceding years, and the number of Martinrea common shares beneficially owned, or controlled or directed, directly or indirectly, by such Nominee. None of the Nominees is currently serving as a director of Martinrea.

Name, Province, and Country of Residence^1	Present Principal Occupation, Business or Employment and Principal Occupation, Business or Employment During the Preceding Five Years	Number of Common Shares Beneficially Owned or Controlled or Directed (Directly or Indirectly)
Manfred Gingl Ontario, Canada	CEO of BionX International (2010 to present). President, CEO, and Vice Chairman of Magna International (1966 to 2010).	Nil
Sandra Levy Alberta, Canada	Senior Vice President of Human Resources at Ply Gem Canada (2013 to present). Vice President, Human Resources and CPO of the Canadian National Institute for the Blind (2010 to 2013); Member of the Board of Governors of York University (2007 to 2013); Director of Human Resources at Magna International (2001 to 2010).	Nil
Roland Nimmo Ontario, Canada	President of Nimmo Financial Corporation, a real estate advisory firm (2012 to present). Partner at Deloitte Canada (2008 to 2012).	Nil
Nat Rea Ontario, Canada	President of Rea Holdings (2012 to present). Vice Chairman and Director of Martinrea (2002 to 2012).	100,000
Paul G. Smith Ontario, Canada	Chairman of the Board of VIA Rail Canada (2010 to present); Director of StorageVault Canada (TSX: SVI) (2007 to present). President & CEO of Equity Financial Holdings (TSX: EQI) (2009 to 2014).	Nil

Notes

¹Information set out in the above table and otherwise relating to a Nominee in this news release has been provided by each applicable Nominee of Rea Holdings.

To the knowledge of Rea Holdings, no Nominee is, at the date hereof, or has been, within 10 years before the date hereof: (a) a director, chief executive officer or chief financial officer of any company that (i) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation that was in effect for a period of more than 30 consecutive days (each, an "order"), in each case that was issued while the Nominee was acting in the capacity as director, chief executive officer or chief financial officer, or (ii) was subject to an order that was issued after the Nominee ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer; (b) a director or executive officer of any company that, while such Nominee was acting in that capacity, or within a year of such Nominee ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (c) someone who became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or became subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such Nominee.

To the knowledge of Rea Holdings, as at the date hereof, no Nominee has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation, or by a securities regulatory authority, or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a Nominee.

None of Rea Holdings and its directors and officers, or, to the knowledge of Rea Holdings, any associates or affiliates of the foregoing, or to the knowledge of Rea Holdings, any of the Nominees or their respective associates or affiliates, has any material interest, direct or indirect, in any transaction since the commencement of Martinrea's most recently completed financial year, or in any proposed transaction which has materially affected or will materially affect Martinrea or any of its subsidiaries. None of Rea Holdings or, to its knowledge, any of its associates or affiliates, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at an upcoming meeting of Martinrea shareholders, other than the election of directors.

Forward-looking Information

Certain information included in, or incorporated by reference into, this news release contains forward-looking statements or forward-looking information within the meaning of applicable securities laws, including, without limitation, in respect of Rea Holdings' and Martinrea's respective priorities, plans and strategies for Martinrea and Martinrea's anticipated financial and operating performance and prospects and statements relating to the ability of Rea Holdings to effect change to the board of directors of Martinrea. All statements and information, other than statements of historical fact, included in or incorporated by reference into this news release are forward-looking statements and forward-looking information, including, without limitation, statements regarding activities, events or developments that Rea Holdings expects or anticipates may occur in the future. Such forward-looking statements and information can be identified by the use of forward-looking words such as "will", "expect", "intend", "plan", "estimate", "anticipate", "believe" or "continue" or similar words and expressions or the negative thereof. There can be no assurance that the plans, intentions or expectations upon which such forward-looking statements and information are based will occur or, even if they do occur, will result in the performance, events or results expected. Forward-looking statements contained in this news release are subject to certain risks and uncertainties. Actual results may differ from those in the forward-looking statements should one or more of these risks or uncertainties materialize. Such risks include, but are not limited to, lack of cooperation from the current board and management of Martinrea regarding the conduct of a shareholders meeting and any potential actions that may be taken by the current board and management of Martinrea that could thwart any efforts to bring change to the board of Martinrea. All such factors should be considered carefully when making decisions with respect to Martinrea, and undue reliance should not be placed on Rea Holdings' forward-looking statements. The forward-looking statements and information included in this news release are made as of the date of the news release and Rea Holdings undertakes no obligation to publicly update such forward-looking statements or information to reflect new information, subsequent events or otherwise, except as required by applicable laws. Martinrea shareholders are cautioned that all forward-looking statements and information involve risks and uncertainties, including those risks and uncertainties detailed in Martinrea's continuous disclosure and other filings with applicable Canadian securities regulatory authorities, copies of which are available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com. The forward-looking statements and information contained in this news release are expressly qualified in their entirety by this cautionary statement.

SOURCE: Rea Holdings Inc.

Media: Riyaz Lalani, Bayfield Strategy, Inc., 416-907-9365, [email protected], www.bayfieldstrategy.com