NEW
YORK, May 10, 2023 /CNW/ - Pelham Investment
Partners LP ("Pelham LP", "we", "our" and
similar pronouns) provides an update on its latest attempt at
engaging with management of Nickel 28 Capital Corp. (formerly Conic
Metals Corp.) (TSXV: NKL) ("Nickel 28" or the
"Company").
In the hopes of having constructive engagement with the Company
and avoiding a costly and unnecessary proxy contest in the face of
clear shareholder dissatisfaction, Pelham LP extended a reasonable
settlement offer to the board of directors of the Company
("Management" or the "Board"), which was summarily
rejected by Management. As the single largest shareholder of the
Company, Pelham LP is disappointed that the directors have again
opted for entrenchment over discussion.
Management and the Board's
Unwillingness to Adopt Necessary Changes
In its May 3, 2023 press release,
the Company claimed a "commitment to shareholder engagement" and
faulted Pelham LP for having "not engaged with the Board".
These statements are misleading. Contrary to these assertions,
Pelham LP has now made two constructive proposals to the Company,
each of which represented an invitation to engage, and neither of
which has elicited any response other than an outright
rejection. True engagement necessarily requires a willingness
to consider changes and the Board's actions make it clear that it
has no such willingness.
Instead of engaging in the hard business of compromise, the
Company unilaterally announced, in its May
3, 2023 press release, a decision not to seek the renewal of
its existing equity-based compensation plan. This decision
should be viewed cynically since, as Pelham LP has previously
noted, insiders are not permitted to vote on the renewal of such
plans, and any proposal for a renewal of the plan would result in a
humiliating defeat given shareholder sentiment.
The Settlement Offer
Pelham LP believes that the Board has already squandered
substantial shareholder wealth through both gross over-compensation
of executives and expenditures designed to insulate itself from
attempts to curtail such excessive compensation in the
future. For the Board to continue on this path, as seems to
be its intent, would represent a continued dereliction of both its
duty of care and its fiduciary duty to the Company. In a
good-faith effort to avert this undesirable outcome, Pelham LP made
a settlement offer to the Company which was delivered on the
evening of May 7th.
This settlement offer presumed the sincerity of the Board's
statements – that it was interested in engaging with
shareholders and that it was interested in
instituting sane compensation practices. The terms of this
offer included the following:
- At the Company's choice, one of the two current Executive
Directors (Mr. Milewski and Mr. Cochrane) could remain on the Board.
- The Company would also decide which one of the three current
"independent" directors would remain on the Board.
- Ned Collery of Pelham LP – the Company's largest disclosed
shareholder - would join the Board.
- The Company would select two of the other independent nominees
proposed by Pelham LP to join the Board.
- Messrs. Milewski, Cochrane,
Vydra, and Kearns would return all
stock-based compensation granted to them in the 2022 fiscal
year.
- Directors Swan and Williams would return half of the
stock-based compensation granted to them in the 2022 fiscal
year.
- Mr. Lennon and any other employees of the Company who received
stock-based compensation would retain 100% of that
compensation.
- Pelham LP would agree to a one-year standstill from further
activism.
We felt that this was a more-than-reasonable offer which would
have: (i) resulted in a refreshed Board with enhanced independence;
(ii) provided for continuity of oversight; and (iii) resulted in
both management and the Company's single largest shareholder having
representation on the Board. This proposal afforded the
Company an opportunity to rectify its long-standing and glaring
issues with corporate governance and excessive compensation.
However, yesterday the Company dismissed our offer out of hand,
seemingly setting itself on course for a proxy contest that stands
to be: (i) wasteful of Company resources; (ii) contemptuous of
shareholders' interests; and (iii) futile.
Recently, the Board has emphasized the importance of continuity
in maximizing the Company's value. Based on past practice, if
this Board remains, we believe that the only thing shareholders
should expect is a continuation of the past practices of inadequate
independent oversight and excessive compensation at the expense of
non–management shareholders. The Board has repeatedly shown
an unwillingness to do what is right. It is time for them to
go.
Management's Ironic Obsession with
"Control"
The Company makes much of Pelham LP's purported desire to take
"control" of Nickel 28 "without paying all shareholders an
appropriate premium". At present, of course, the Company is
controlled by a management team that not only failed to pay, to use
the Company's own words, "an appropriate premium for their shares",
but received the vast majority of such shares from the Company
without any cash consideration at all.
The Pelham LP director slate consists of a representative of the
Company's single largest shareholder (who has committed to take
no compensation for at least the first year of his
term) and four other highly qualified and independent
directors. In no way could this arrangement be characterized
as giving Pelham LP control of the Board. Further, in the
interests of avoiding an expensive and unnecessary contest, Pelham
LP proposed in its settlement offer that only three of these five
highly qualified directors be appointed to the Board, allowing the
incumbents to retain two seats and to select which two of Pelham
LP's nominees would join the reconstituted Board. To
characterize this as Pelham LP demanding "control" is
laughable.
We anticipate that our slate of directors will be elected at the
Company's upcoming annual general and special meeting of
shareholders by the vote of a great majority of non-management
shareholders. Rather than representing an assertion by Pelham
LP of control over the Company, such an outcome will represent a
victory for shareholders generally and the breaking of management's
current control.
The Board's seeming inability to countenance the idea that
Pelham LP proposes to act in the interests of all shareholders says
more about them than it does about Pelham LP. To be clear:
Pelham LP sees more profit and sounder sleep in a well-managed
Nickel 28 than it does in the sort of self-serving compensation
practices in which the incumbent Board has engaged.
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, however Pelham LP is
providing the following disclosure in reliance on section 9.2(4) of
National Instrument 51-102 – Continuous Disclosure
Obligations in respect of public broadcast solicitations (the
"Public Broadcast Exemption"). Pelham LP intends to file a
dissident information circular in due course in connection with the
upcoming annual general and special meeting of shareholders of the
Company to be held on June 12, 2023
(the "Meeting"), in compliance with applicable securities
laws.
The information contained herein, and any solicitation made by
Pelham LP in advance of the Meeting, is or will be, as applicable,
made by Pelham LP and not be or on behalf of management of the
Company. All costs incurred for any solicitation will be borne by
Pelham LP, provided that subject to applicable law, Pelham LP may
seek reimbursement from the Company of its out-of-pocket expenses,
including proxy solicitation expenses and legal fees, incurred in
connection with a successful outcome resulting from shareholder
activism that Pelham LP, in its discretion, may pursue. Pelham LP
may engage the services of one or more agents (including Laurel
Hill Advisory Group) and authorize other persons to assist in
soliciting proxies on behalf of Pelham LP. Any such proxies may be
solicited pursuant to a dissident information circular, or by way
of public broadcast, including through press releases, speeches,
publications and by any other manner permitted under Canadian
corporate and securities 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.
Pelham LP intends to nominate for election at the Meeting a
slate of individuals to serve on the Board (the "Nominees").
Information about the Nominees, including information required
pursuant to the Public Broadcast Exemption, can be found in the
press release issued by Pelham LP on May 4,
2023 and filed on SEDAR under the Company's profile at
www.sedar.com.
Neither Pelham LP nor, to its knowledge, any of the Nominees,
nor any of their respective associates or affiliates, has any
material interest, direct or indirect, in any transaction since the
commencement of Nickel 28's most recently completed financial year,
or in any proposed transaction which has materially affected or
will materially affect Nickel 28 or any of its subsidiaries.
Neither Pelham LP nor, to its knowledge, any of the Nominees, nor
any of their respective 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 the AGM,
other than as set out herein.
To the knowledge of Pelham LP, Nickel 28's head office is
located at 155 University Avenue, Suite 1240, Toronto, Ontario M5H 3B7 and its registered
address is located at Suite 2500, Park
Place, 666 Burrard Street, Vancouver, British Columbia, V6C 2X8. A copy
of this press release may be obtained under Nickel 28's SEDAR
profile at www.sedar.com.
Cautionary Statement Regarding
Forward-Looking Information
Certain statements contained in this press release, including
without limitation statements regarding the upcoming Meeting and
the Nominees to be nominated by Pelham LP thereat contain
"forward-looking information" and are prospective in nature.
Statements containing forward-looking information are not based on
historical facts, but rather on current expectations and
projections about future events, and are therefore subject to risks
and uncertainties that could cause actual results to differ
materially from the future outcomes expressed or implied by the
statements containing forward-looking information. Often, but not
always, statements containing forward-looking information can be
identified by the use of forward-looking words such as "plans",
"expects", "intends", "anticipates", or variations of such words
and phrases or statements that certain actions, events or results
"may", "could", "should", "would", "might", or "will" be taken,
occur or be achieved. Although Pelham LP believes that the
expectations reflected in statements containing forward-looking
information herein made by it (and not, for greater certainty, any
forward-looking statements attributable to the Company) are
reasonable, such statements involve risks and uncertainties, and
undue reliance should not be placed on such statements. Material
factors or assumptions that were applied in formulating the
forward-looking information contained herein include the assumption
that the business and economic conditions affecting the Company's
operations will continue substantially in the current state,
including, without limitation, with respect to industry conditions,
general levels of economic activity, continuity and availability of
personnel, local and international laws and regulations, foreign
currency exchange rates and interest rates, inflation, taxes, that
there will be no unplanned material changes to the Company's
operations, and that the Company's public disclosure record is
accurate in all material respects and is not misleading (including
by omission). Pelham LP cautions that the foregoing list of
material factors and assumptions is not exhaustive. Many of these
assumptions are based on factors and events that are not within the
control of Pelham LP and there is no assurance that they will prove
correct. Important facts that could cause outcomes to differ
materially from those expressed or implied by such forward-looking
information include, among other things, actions taken by the
Company in connection with the AGM, the content of subsequent
public disclosures by the Company, general economic conditions,
legislative or regulatory changes and changes in capital or
securities markets. These are not necessarily all of the important
factors that could cause actual results to differ materially from
those expressed in any of Pelham LP's forward-looking information.
Other unknown and unpredictable factors could also impact outcomes.
Statements containing forward-looking information in this press
release are based on Pelham LP's beliefs and opinions at the time
the statements are made, and there should be no expectation that
such forward-looking information will be updated or supplemented as
a result of new information, estimates or opinions, future events
or results or otherwise, and Pelham LP disclaims any obligation to
do so, except as required by applicable law.
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SOURCE Pelham Investment Partners LP