- Immediate Board refresh is needed to preserve shareholder value and maximize the Company's potential
- Current leadership team recklessly pursued and closed on overpriced and risky acquisition without shareholder vote or fairness opinion
- Transactions with related parties and lack of independent oversight need to be addressed for Company to be successful over time
An immediate overhaul of the Board with independent and experienced directors is necessary to prevent further value destruction and to construct an effective strategy for growth moving forward.
"It's clear that change is required at
BACKGROUND TO THE REQUISITION
As Shareholders, we must recognize that the current Board and management team have failed to create value. In fact, value has been destroyed. Since the listing of the Shares on the
Throughout this most recent period of rapid share price decline, the Concerned Shareholder has continuously expressed its concerns to the Board regarding the strategic direction of the Company. Rather than address these concerns, the Board opted to move ahead without a coherent strategy or business plan, while handing over significant Board representation and management positions to individuals associated with Hawthorne, which holds no equity in the Company.
To make matters worse, the leadership team pushed ahead with an ill-advised acquisition of a significantly over-priced
Unfortunately for Shareholders, the Company disregarded the Concerned Shareholder's comments and analysis and proceeded to sign a purchase agreement that completely altered the business model of the Company and required over
And yet, in spite of what can only be considered dismal performance over the last twelve months, the Board just recently pushed through an increase in the annual retainer compensation for non-employee directors for 2023 from
THE REQUISITION
The Concerned Shareholder is seeking to replace five of the seven current Board members with five independent, diverse, highly-qualified and accountable directors, who are ready to represent the interests of Shareholders by providing new strategic viewpoints for the Company and exercising appropriate governance and oversight with respect to Company management. The Concerned Shareholder is also seeking a mandate from Shareholders for the newly constituted Board to establish a special committee composed of each of the elected Concerned Shareholder Nominees (as described below) to investigate the actions of Hawthorne and its Board nominees (the "Hawthorne Nominees") to determine whether there is any cause for the Company to bring an action or other claim against any of them.
Additionally, the Concerned Shareholder will request that the newly constituted Board vote on a compensation structure more in line with levels from 2022.
Given the current Board's historical record of value destruction and a series of continued irresponsible decisions that have resulted in the market discounting the value of the Shares, the Concerned Shareholder requests that the special meeting be held promptly, and by no later than
Fully Independent, Highly-Qualified and Accountable Nominees
In light of what we see as the mismanagement, self-interest, and ineffectiveness of the Board, the Concerned Shareholder seeks the removal of
Before joining SAI,
Christopher JWB Leggett, MD., FACC is a highly esteemed clinical academic interventional cardiologist. He spent nearly three decades practicing interventional cardiology throughout the
Shareholder Warning: The Board is Likely to Spend Shareholder Money Mounting a Smear
Campaign to Distract from Performance
The Concerned Shareholder fully expects the Board to spin the focus of the Requisition and the campaign for change by mounting an aggressive and costly smear campaign against the Concerned Shareholder. However, given what we understand was underwhelming support of the Board at the recently held annual general meeting of Shareholders, we believe that the Concerned Shareholder is just one of many Shareholders who are legitimately concerned about the Board's actions.
In connection with the Requisition, the Concerned Shareholder urges the Board not to take any steps to further entrench themselves.
Advisors
* * * * *
INFORMATION CONCERNING THE CONCERNED SHAREHOLDER NOMINEES
As set out in the Requisition, the Concerned Shareholder Nominees are Raymond Boyer,
Present Principal Occupation, Business or Employment and Principal Occupation, Business or Employment During the Preceding Five Years | Number of Shares Beneficially Owned or Controlled or Directed (Directly or Indirectly) | |
Partner of Chief Executive Officer of Missouri Leasing and Co-founder of Organic Remedies Missouri, a vertical medical marijuana operator in Chief Executive Officer of Chief Financial Officer and co-founder of | Nil | |
President and Chief Investment Officer of Seventh Avenue Investments, the private equity arm of a single family office in | Nil | |
Founder and Chief Executive Officer of Co-Founder and President of Tyson 2.0 Inc., a marketing and intellectual property company, from Chief Revenue Officer at | Nil | |
An interventional cardiologist and a Director of the Cardiovascular Institute PC, an institute providing cardiovascular health care services, fromJanuary 2015 onwards. An interventional cardiologist and a Director of Interventional Cardiology at | Nil | |
Chief Human Resources Officer of Chief Transformation and Human Resources Officer of Dawn Foods Products, a baked goods production and distribution company, from Chief Human Resources Officer of | Nil |
Other Boards of Reporting Issuers
As at the date of this Requisition,
Other Information Concerning the Concerned Shareholder Nominees
To the knowledge of the Concerned Shareholder, no Concerned Shareholder Nominee is, at the date hereof, or has been, within ten (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 thirty (30) consecutive days (each, an "order"), in each case that was issued while the Concerned Shareholder 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 Concerned Shareholder 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 Concerned Shareholder Nominee was acting in that capacity, or within one (1) year of such Concerned Shareholder 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 Concerned Shareholder Nominee.
To the knowledge of the Concerned Shareholder, as at the date hereof, no Concerned Shareholder 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 Concerned Shareholder Nominee.
ADDITIONAL INFORMATION
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 the Concerned Shareholder has requisitioned a special meeting of Shareholders (the "Meeting"), 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 Concerned Shareholder Nominees or any other resolution set forth in the Requisition. In connection with the Meeting, the Concerned Shareholder may file a dissident information circular in due course in compliance with applicable securities laws.
Notwithstanding the foregoing, the Concerned Shareholder is voluntarily providing the disclosure required under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations ("NI 51-102") and section 112(1.2) of the Business Corporations Act (
The Concerned Shareholder is an
As of the date hereof, the Concerned Shareholder controls and directs 33,433,334 Shares, representing approximately 19.77% of the issued and outstanding Shares through funds that are controlled or directed by the Concerned Shareholder (the "Funds"). The Funds are the registered owners of Shares as follows:
- 24,333,334 Shares are held by
JW Partners, LP ; - 9,000,000 Shares are held by
JW Opportunities Master Fund, LTD. ; - 70,000 Shares are held by
JW Growth Fund, LLC ; and - 30,000 Shares are held by
Insight Wellness Fund, LLC .
The Shares listed above have been held by the Concerned Shareholder for greater than two years, originally as subordinated voting shares of the Company, which became Class A voting shares upon the closing of the Company's arrangement on
The information contained herein and any solicitation made by the Concerned Shareholder in advance of the Meeting is, or will be, as applicable, made by the Concerned Shareholder and not by or on behalf of the management of
The Concerned Shareholder is not soliciting proxies in connection with the Meeting at this time, and Shareholders are not being asked at this time to execute proxies in favour of the Concerned Shareholder Nominees (in respect of the Meeting) or any other resolution set forth in the Requisition. Proxies may be solicited by the Concerned Shareholder pursuant to a dissident information circular sent to Shareholders after which solicitations may be made by or on behalf of the Concerned Shareholder, 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 Concerned Shareholder, who will not be specifically remunerated therefor. The Concerned Shareholder may also solicit proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws, conveyed by way of public broadcast, including through press releases, speeches or publications, and by any other manner permitted under applicable Canadian 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 Concerned Shareholder may engage the services of one or more agents and authorize other persons to assist in soliciting proxies on behalf of the Concerned Shareholder.
The Concerned Shareholder has retained
To the knowledge of the Concerned Shareholder, none of the directors or officers of the Concerned Shareholder, or any associates or affiliates of the foregoing, or any of the Concerned Shareholder Nominees or their respective associates or affiliates, has: (a) any material interest, direct or indirect, in any transaction since the commencement of the Company's most recently completed financial year or in any proposed transaction which has materially affected or will materially affect the Company or any of its subsidiaries; or (b) any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter proposed to be acted on at the meeting, other than the re-constitution of the Board.
There are no contracts, arrangements or understandings between any of the Concerned Shareholder Nominees and any other person pursuant to which the Concerned Shareholder Nominees are to be elected.
The registered address of
Additional Disclosure Required Under Early Warning Reporting Requirements
In connection with the Requisition and this press release, the Concerned Shareholder has filed an early warning report (the "EWR") in accordance with applicable Canadian securities laws, which will be available on SEDAR at www.sedar.com and can also be obtained by contacting
In addition to the Requisition, the Concerned Shareholder may, alone and/or with others, from time to time have discussions with the Board or management of the Company and may make suggestions concerning the Company's operations, prospects, business and financial strategies, assets and liabilities, business and financing alternatives and such other matters as the Concerned Shareholder may deem relevant to its investment in the Shares.
As further described in the EWR, the Concerned Shareholder commenced court proceedings against the Company in
From time to time the Concerned Shareholder, depending on market and other conditions, may acquire or dispose of additional securities of the Company or may continue to hold the securities.
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1 Based on a trading price of |
SOURCE
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