- Aimia's Private Placement Is Clearly a Defensive Tactic and
Mithaq Is Pursuing Regulatory Remedies
- Mithaq's All-Cash Takeover Bid for Aimia of $3.66 per Common Share Is the Best Option for
Shareholders, Representing a Compelling Premium of
Approximately 20% to Pre-Bid Trading Price on the
TSX
- Shareholders Should Continue to
Visit www.cashpremiumforaimia.com for the Latest
Updates
TORONTO, Oct. 16,
2023 /CNW/ - Mithaq Canada Inc. (the
"Offeror"), a wholly-owned subsidiary of Mithaq Capital SPC
("Mithaq"), the largest shareholder of Aimia Inc. (TSX: AIM)
("Aimia"), today made the following statement regarding
Aimia's October 13, 2023 announcement
that it intends to dilute its long-suffering existing shareholders
by issuing discounted shares and warrants to a new group of
undisclosed investors in a private placement, raising cash that
Aimia does not need, while increasing the share count by as much as
24.89% and providing this group with up to three of eight Aimia
board seats, all in a bid to further entrench the Aimia board and
management.
"The entrenched board's actions come at the expense of
shareholder interests, are a breach of the directors' fiduciary
duties and an affront to basic principles of public company
governance," said Mr. Turki Saleh A.
AlRajhi, Chairman and Chief Executive Officer of the
Offeror. "Aimia's leadership was warned many months ago to cease
their entrenchment tactics and to act in a manner consistent with
their fiduciary duties, and its Chief Executive Officer is on the
record stating that Aimia has ample cash flow and plenty of cash.
The company even highlighted in an investor day presentation less
than three weeks ago that investors should expect 'aggressive'
share buybacks in 2023/2024. Instead, Aimia announced a massive,
dilutive share sale. Investors are right to question the motives of
Aimia's leadership."
"Now, with the Aimia board and management having opted to
double-down on entrenchment efforts, the Offeror will pursue
regulatory remedies available to it. Aimia's leadership has crossed
bright governance lines and has placed themselves in a tenuous
position," Mr. AlRajhi added. "Regardless, Aimia's entrenchment
tactics serve to further underscore why long-suffering shareholders
should immediately tender to the premium offer of $3.66 per common share in cash."
There are a number of reasons why Aimia's attempted private
placement and related board appointments from this new investor
group should alarm shareholders and regulators alike,
including:
- Aimia Has No Disclosed Need to Raise Cash. In fact, in
Aimia's Q2 results on August 11,
2023, Phil Mittleman, Chief
Executive Officer of Aimia, commented:
"…We are now the majority owner of two operating companies that
we expect will provide revenue growth and strong cash flow
generation for Aimia shareholders for years to come." As at
June 30, 2023, Aimia reported
$116.9 million in cash, cash
equivalents and liquid securities.1
On Aimia's May 12, 2023
conference call, Mr. Mittleman noted:
"we're confident that we're going to have plenty of cash to
execute what we need to execute," 2
- Aimia Has Been Misleading Investors. Aimia's most recent
press release announcing the private placement states that it only
began considering available financing options six months ago (i.e.,
around the time of Mithaq's "no vote" campaign in connection with
the April 2023 annual meeting) with
"robust arm's length negotiations" commencing three months ago
(i.e., after Mithaq disclosed it had increased its stake from 19.9%
to 30.96%), yet Aimia's disclosures during this timeframe do not
align with any purported need for a cash infusion, nor a
"comprehensive process" that was underway.3 In
fact, Aimia's presentation at the company's investor day on
September 27, 2023 stated that
investors should expect the company to restart its normal course
issuer bid (NCIB) and "aggressive share buybacks" once a financing
for Aimia's Tufropes acquisition is closed.4 Then,
only 16 days later, the company announced a massive, discounted and
dilutive share sale, something which is diametrically opposed to
returning capital to existing shareholders and contradictory with
respect to Aimia's capital planning and business strategy;
- Private Placement Is Dilutive, Discounted and Unfair to
Existing Aimia Shareholders. Aimia's leadership has priced the
common shares and accompanying warrants at $3.10 per common share in the private placement
and had the gall to misleadingly position that price as a premium
to the trading price on September 14,
2023, completely unreflective of recent trading. In
fact, this is a significant discount to the recent trading
price of Aimia's common shares on the Toronto Stock Exchange.
Long-suffering, existing shareholders were not given the
opportunity to participate in this private placement and should ask
themselves why. The answer is that Aimia is clearly seeking to put
a stake with material impact on control of the company into board-
and management-friendly hands;
- Private Placement Exposes There Is No Plan to Create Value
Beyond What is Already Available to Shareholders via the Cash
Premium Takeover Offer:
- The $3.10 valuation on the
share portion of the private placement is a clear signal by the
board and management to existing shareholders that the current
$3.66 all-cash offer is a very
attractive premium offer; and
- The strike price of the warrant component of the private
placement is $3.70 per warrant, and
the warrants are immediately exercisable and expire five years
from issuance. These terms are highly problematic and
concerning for shareholders. In plain language, Aimia's management
is basically saying "even with a cash infusion, Aimia investors can
only expect our leadership team to create a few cents in value
beyond the current $3.66 all-cash
offer currently available to Aimia shareholders over the next five
years." Shareholders should ask themselves whether they want to
wait as long as five years to see the stock at $3.70, when there is a $3.66 a share cash offer on the table today.
Essentially, Aimia's leadership is conceding that the best option
for current shareholders of Aimia is to tender to the premium
all-cash offer.
- Aimia's Board Hasn't Made a Recommendation Regarding the
Premium Cash Offer but Has Found Time to Close an Unnecessary
Private Placement. The Offeror formally commenced its premium
all-cash offer for Aimia on October 5,
2023 (the "Offer"). Aimia's board has not yet
completed its review of the Offer nor made a formal recommendation
regarding the Offer, but has found time to attempt to complete a
dilutive private placement and hand over up to three out of eight
Aimia board seats to this new investor group. Essentially, the
warrants act like a "stealth poison pill", protecting the
entrenched management and board and telegraphing they prefer to
massively dilute shareholders over engaging with the Offeror in
regards to its premium all-cash offer;
If a responsible board was seriously considering an offer and the
best interests of shareholders, its first response would not be to
issue more shares at a significant discount to new shareholders,
especially when under Canada's
takeover bid regime, the board has more than three months from bid
commencement to seek value enhancing alternatives;
- The Offeror Believes That the Entrenched Directors Who Made
the Decision to Dilute Fellow Shareholders Were Not Properly
Elected. In its October 5, 2023
press release, the Offeror alerted shareholders that it has reason
to believe that none of the directors of Aimia would have been
elected at the most recent meeting of shareholders in April had the
meeting been conducted independently and that Mithaq is now seeking
declaratory relief and an order requiring that Aimia immediately
call and promptly hold a special meeting of shareholders to elect
new directors. The dilutive private placement seems designed to
materially affect the outcome of any vote on the election of
directors;5 and
- Any New Directors Should Be Presented to Shareholders for
Election at a Meeting and Not Appointed by This Self-Interested
Board. These proposed director appointments from the new
investor group have been made by a board that Mithaq believes – and
intends to prove in court – is without legal authority.
Furthermore, shareholders should be highly skeptical of the
independence of the investor group directors given their
appointment in the context of a heavily discounted private
placement following the commencement of the Offer. Aimia should be
aware that the Offeror is considering the implications of any
joint-actorship by this group of new directors and undisclosed
investors.
Unfortunately, the Offeror is not surprised that Aimia is
pursuing these tactics, given its record of prior entrenchment
attempts. Fellow shareholders will recall that the Offeror was
concerned many months ago that Aimia's leadership would attempt an
unnecessary private placement. In a June 5,
2023 press release, the Offeror went public with its
concerns and explicitly warned Aimia's leadership not to further
entrench itself in the face of shareholder discontent, including
attempting an unnecessary private placement of shares to dilute the
ownership of all shareholders, including the Offeror.
The Offeror, with the assistance of its advisors, is pursuing
remedies in regards to the tactical private placement and will
provide further updates to shareholders if/as developments
warrant.
The Choice For Long-Suffering Shareholders Is Clear – Tender
to the Premium Cash Offer Today
The cash consideration under the Offeror's takeover bid
represents premiums of approximately:
- 20% based on the closing price of $3.05 per common share on the TSX on
October 2, 2023 (the last trading day
prior to the announcement of the intention to make the Offer);
and
- 23% to the volume weighted average trading price of
$2.98 per common share on
the TSX over the 20 trading days ended October 2, 2023.
Full details regarding the premium cash Offer, including a
letter to shareholders and takeover bid circular, are available
at www.cashpremiumforaimia.com as well as under Aimia's
profile on SEDAR+ at www.sedarplus.ca.
As an update on the Offer, Mithaq is pleased to announce that
the Commissioner of Competition has issued an Advance Ruling
Certificate in respect of the Offer, which constitutes "Competition
Act Approval" under the terms of the Offer.
Shareholders with questions or in need of assistance accepting
the Offer can contact Carson Proxy Advisors by telephone at
1-800-530-5189 (North American Toll-Free Number) or 416-751-2066
(outside North America) or by
email at info@carsonproxy.com.
Further information is also available at
www.cashpremiumforaimia.com, which will be updated as the tender
process proceeds.
This press release does not constitute an offer to buy or the
solicitation of an offer to sell any securities of the Offeror,
Mithaq or Aimia.
ABOUT MITHAQ
Mithaq is the largest shareholder of Aimia, holding 26,059,000
common shares of Aimia representing approximately 30.96% of the
issued and outstanding common shares of Aimia. Mithaq is a
segregated portfolio company and affiliate of Mithaq Holding
Company, a family office based in Saudi
Arabia with investments in public equities, real estate,
private equity and income-producing assets in local and
international markets.
ADVISORS
Torys LLP is acting as legal advisor, Carson Proxy Advisors is
acting as Information Agent and Longview Communications and Public
Affairs is acting as communications advisor to the Offeror and
Mithaq in respect of the Offer.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
This document contains "forward-looking statements" (as
defined under applicable securities laws). These statements relate
to future events or future performance and reflect the Offeror and
Mithaq's expectations, beliefs, plans, estimates, intentions, and
similar statements concerning anticipated future events, results,
circumstances, performance or expectations that are not historical
facts. Forward-looking statements include, but are not limited to,
statements regarding: the Offer, including the response of Aimia's
board and management to the Offer; risks and challenges facing
Aimia; Mithaq's beliefs with respect to its investment in Aimia and
its related strategy; statements in respect of litigation with
Aimia; and statements with respect to Mithaq's intention to seek
regulatory remedies in respect of Aimia's actions. Such
forward-looking statements reflect the Offeror and Mithaq's current
beliefs and are based on information currently available. In some
cases, forward-looking statements can be identified by terminology
such as "may", "will", "should", "expect", "plan", "anticipate",
"believe", "estimate", "predict", "potential", "continue",
"target", "intend", "could" or the negative of these terms or other
comparable terminology.
By their very nature, forward-looking statements involve
inherent risks and uncertainties, both general and specific, and a
number of factors could cause actual events or results to differ
materially from the results discussed in the forward-looking
statements. In evaluating these statements, readers should
specifically consider various factors that may cause actual results
to differ materially from any forward-looking statement. These
factors include, but are not limited to, market and general
economic conditions (including slowing economic growth, inflation
and rising interest rates) and the dynamic nature of the industry
in which Aimia operates.
Although the forward-looking information contained in this
document is based upon what the Offeror and Mithaq believe are
reasonable assumptions, there can be no assurance that actual
results will be consistent with these forward-looking statements.
The forward-looking statements contained in this document are made
as of the date of this document and should not be relied upon as
representing views as of any date subsequent to the date of this
document. Except as may be required by applicable law, the Offeror
and Mithaq do not undertake, and specifically disclaim, any
obligation to update or revise any forward-looking information,
whether as a result of new information, further developments or
otherwise.
Neither the Offeror, Mithaq nor or any of their subsidiaries,
affiliates, associates, officers, partners, employees,
representatives and advisers, make any representation or warranty,
express or implied, as to the fairness, truth, fullness, accuracy
or completeness of the information contained in this document or
otherwise made available, nor as to the reasonableness of any
assumption contained herein, and any liability therefore (including
in respect of direct, indirect, consequential loss or damage) is
expressly disclaimed. Nothing contained herein is, or shall be
relied upon as, a promise or representation, whether as to the past
or the future and no reliance, in whole or in part, should be
placed on the fairness, accuracy, completeness or correctness of
the information contained herein.
___________________________________________________________________
1
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https://www.newswire.ca/news-releases/aimia-reports-second-quarter-2023-results-880677664.html
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2
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https://www.newswire.ca/news-releases/mithaq-provides-update-to-fellow-concerned-shareholders-on-aimia-s-further-attempts-to-frustrate-shareholder-democracy-and-avoid-transparency-845534910.html
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3
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https://www.newswire.ca/news-releases/aimia-announces-strategic-investment-and-new-director-appointments-813718137.html
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4
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https://www.aimia.com/wp-content/uploads/2023/09/Aimia_Investor-Day_09-26-2023_1750.pdf
(p. 151)
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5
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https://www.cashpremiumforaimia.com/assets/uploads/pdf/Mithaq-Press-Release-re-Commencement.pdf
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SOURCE Mithaq Canada Inc.