- It is Time for Change at Nickel 28 -
- Management has enriched themselves at shareholders' expense
while turning a blind eye to their own serious and long-standing
governance failures.
- Management's recent actions reveal the Board to be an
entrenched group, which is, contrary to their own disclosures,
comprised of a majority of non-independent directors and
whose acts threaten to deprive shareholders of their right to
choose who manages their company.
- Pelham is proposing a team
of respected, highly-qualified and independent professionals to
stand for election to the Board, who have the right skills and
experience to provide effective independent oversight of
Management.
- Shareholders are urged to vote "FOR" each of
Pelham's director nominees and
"WITHHOLD" votes on any Nickel 28 director nominees using
only the YELLOW proxy ahead of the proxy voting deadline of
June 7, 2023 at 9:00 p.m.(Eastern Time).
- Pelham's letter to
shareholders and information circular, as well as additional
important information, is available at
www.savenickel28.com.
- Questions or need voting assistance? Shareholders with
questions or who need voting assistance may contact Laurel Hill
Advisory Group at 1-877-452-7184 (416-304-0211 outside North America) or by email at
assistance@laurelhill.com.
NEW
YORK, May 24, 2023 /CNW/ - Pelham
Investment Partners LP ("Pelham", "we", "our" and
similar pronouns), a New
York-based investment fund and the single largest
shareholder of Nickel 28 Capital Corp. (formerly Conic Metals
Corp.) (TSXV: NKL) (FSE: 3JC0) ("Nickel 28" or the
"Company"), advises fellow shareholders that it has issued a
letter to shareholders and information circular as well as a form
of proxy for use by shareholders in connection with Nickel 28's
upcoming annual general and special meeting, to be held on
June 12, 2023 beginning at
10:00 a.m. (Toronto time) (the "Meeting").
As the largest shareholder of the Company, holding approximately
14.3% of Nickel 28's issued and outstanding shares, we believe that
the board of directors of the Company (the "Board" or
"Management") must be urgently reconstituted in order to
ensure that the interests of shareholders are appropriately
represented and safeguarded. Accordingly, Pelham is proposing for election to the Board
at the upcoming Meeting, five highly–qualified and truly
independent individuals. Our nominees are: Edward (Ned) Collery, Daniel Burns, Marilyn
Spink, David Whittle and Ross
B Levin. Additional information about our nominees can be found in
our letter to shareholders and information circular, which is
available at www.savenickel28.com.
Pelham expects that, if
elected, its nominees will put an end to Management's continual
failures which have manifested as, among other things, a number of
significant governance issues, a lack of independent oversight, and
a long–standing history of excessive executive compensation. These
problems have and continue to harm the interests of Nickel 28 and
its shareholders.
Rather than try to distract shareholders with baseless innuendo
and insinuation as the Board has done, we present the facts and
leave it to the Company's shareholders to decide whether the
current Board should continue to steward their investment in Nickel
28. Our concerns are briefly summarized below, and are described in
greater detail in our letter to shareholders and information
circular (which we strongly recommend shareholders read
before making a voting decision for the upcoming Meeting):
Nickel 28 Suffers from Dramatic
and Long-standing Governance Failures
Nickel 28's directors and officers are enmeshed in a number of
significant and compromising interlocking relationships across
various companies which benefit them and harm shareholders. To
date, these relationships appear to have flown under the radar –
but no longer:
- As a result of one of these relationships (which, along with
its problematic consequences, is described in much more detail in
our letter to shareholders and information circular), director
Phillip Williams is, contrary to the
current Board's claims, NOT independent, yet, in addition to
being put forward as the Company's "Lead Independent
Director" he chairs Nickel 28's two-person
Compensation Committee which has approved staggering compensation
at substantial expense to the Company and its shareholders.
- Nickel 28 director Maurice Swan
is also the Chairman of the Board and serves on the Compensation
Committee of Carbon Streaming Corporation (NEO: NETZ) (OTCQB:
OFSTF) (FSE: M2Q) ("CSC"). Nickel 28 President and director
Justin Cochrane is also a director
and the Chief Executive Officer of CSC, where both are provided
excessive levels of compensation despite CSC's stock price falling
roughly 75% in the less than two years since its listing. We
believe that a properly advised Board should deem this a "material
relationship", and that Mr. Swan should be considered a
non-independent director of Nickel 28.
The current Board has also failed to meet basic standards of
governance, including:
- With its December 8, 2021 stock
based compensation grant, the Board violated the limits on its
already generous stock-based compensation plan.
- The Board has seemingly back-dated its 2022 equity-based
compensation grants from December
15th to December
7th to reduce the stated value of those grants in
its disclosures to shareholders, which allowed them to claim that
the grant value was less than it actually was, reducing reported
compensation.
- For several years, and in violation of TSX-V listing
requirements as well as the Company's own Board mandate, the
Company had, at most, only one legally independent director and
three non–independent directors. The Company's disclosure,
including their recently issued management information circular for
use in connection with the Meeting, is materially false in this
regard, and the validity of any "independent determination" of the
so-called "independent directors" of the Company on a range of
matters – including historic compensation - is called into serious
question.
Egregious Levels of
Compensation
Given the Company's poor governance track record it should come
as no surprise that Management receives egregious levels of
compensation, paid for with the Company's funds and at the direct
expense of shareholders:
- Despite not directly operating any assets, Nickel 28 executives
receive compensation in the 94th percentile when
compared to peers,1 most of whom actively operate their
assets;
- The Company also has three redundant layers of management:
-
- Craig Lennon (Head of
Asia Pacific at the Company),
handles the day-to-day management of the Company's interest in the
Ramu joint venture and the relevant relationships, as he has for
many years and, as far as we can tell, he does so skillfully.
- Despite Mr. Lennon managing the Company's interest in its only
asset with active operations, the Company's President, Justin Cochrane – who works only
part-time at the Company (due to the fact that Mr. Cochrane
is also the CEO of another public issuer) was paid nearly
$2.4 million last year ($4.8 million on a full-time equivalent basis or
almost six times the peer median CEO compensation) for no
discernible incremental effort.
- On top of having both someone to directly manage the Company's
interest in its core asset and a President to oversee him, the
Company also has an Executive Chairman – Anthony Milewski – who was paid roughly
$3.3 million last year (roughly 5
times the peer median compensation), despite the fact that,
according to his own (currently public) Instagram account, he
apparently spends the bulk of his time at luxurious vacation
destinations2.
- Conor Kearns, the Company's
part-time CFO, was provided compensation valued at almost
$700,000 last year (and well in
excess of $1 million in 2021). The
CFO of Nickel 28's predecessor, Cobalt 27 Capital Corp. (which
owned all of Nickel 28's assets, and much more), was paid less than
$150,000 in the last full year it was
a public company.
- Nickel 28 directors are each paid approximately $270,000 a year to serve on a Board that,
according to the Company's own management information circular,
only had two full board meetings last year. To put this egregious
compensation in context, the median compensation for directors of
The Toronto-Dominion Bank ("TD") – Canada's second largest publicly traded
institution, with assets nearly 12,500 times greater than Nickel 28
– was $275,000 last year. Instead of
two meetings, the board of directors of TD had sixteen full board
meetings last year.
Unacceptable Valuation
Under the current Board's stewardship, which has been plagued by
self-interested decision-making, the market has routinely valued
Nickel 28's stock at a dramatic discount to net-asset-values
derived from the Board and Management's own disclosures. We
estimate that the Company's shares have traded at an average of
just 21% of this Management informed net-asset-value since the
Company was listed.3 Given the problems detailed above,
we believe that market concerns with the current Board and
Management are the principal reason for this discount.
Efforts at Entrenchment
The current Board has made it clear they will not voluntarily
undertake the changes to governance and compensation which are
necessary to ensure that your Company succeeds. When confronted
with these problems, both privately and publicly, the Board's
reaction has been to undertake a concerted campaign of
entrenchment. Entrenchment efforts to date include:
- After having ignored, for six months, our privately written
concerns that the Board was not in compliance with its own Board
mandate which requires at least three independent directors, the
Board appointed Lance C. Frericks to
the Board less than 48 hours after it became apparent that our
criticism would become public. Mr. Frericks appears to have no
public board experience or skills relevant to the Company's
business. Despite our questions, the Company has not explained why
and how he was chosen.
- The Board instituted a "poison pill" despite the fact that
Management collectively owned enough stock to trigger the "poison
pill". To make sure they wouldn't have to "eat their own cooking"
management included grandfather provisions to ensure Management, as
a group, wouldn't trigger the "pill".
- The Board set the record date for the Meeting one-day prior to
the expiry of Pelham's tender
offer in a transparent effort to hinder our ability to vote the
shares we purchased in the tender offer. Normally, the Company
holds its Meeting in the late summer but, this year, Management
moved it up to mid-June and provided no prior notice of the record
date. We believe the structuring of the Meeting was intended to
impede our director recruitment and nomination efforts and hinder
our ability to vote shares with which we could hold Management
accountable.
- The Board rejected, without any attempt at engagement, a
settlement offer we made (our second formal private attempt at
engagement which followed numerous public requests for engagement)
that would have provided for the current Board members to retain
two seats and have substantial discretion over the composition of
the remainder of the Board. It is cynical and false for the Company
to claim that a proxy contest was unavoidable inasmuch as we tried,
on multiple occasions, to get the Board to address its glaring
governance and compensation problems voluntarily.
- Concerned that hollow attacks wouldn't work, and in an affront
to shareholder democracy, the Board is attempting to use a flimsy
pretext to deny you the ability to even consider our alternative
slate of highly-qualified and truly independent director nominees.
Pelham is addressing these legal
shenanigans head-on and intends to vigorously defend the right of
shareholders to have a say on who is elected to the Board.
- To date, the Company and members of the Board have, together,
hired several advisors to assist them in their efforts to avoid
accountability. These include at least four law firms, a financial
advisor, a "strategic shareholder advisor" and at least one
"strategic communications advisor". All of these firms, who are
working with an entrenched Board at the Company's expense,
represent a waste of shareholder resources.
Pelham Has a Plan to Substantially
Improve the Value of Your Investment
Contrary the current Board's false assertion, Pelham has a credible, actionable, and
straightforward plan to greatly increase the value of your
investment. For more details on our plan and how we expect that our
nominees will lead the Company into a brighter future for all
shareholders, please see our letter to shareholders and information
circular.
To be clear, our truly independent director nominees will
act with discipline as they methodically assess and steward the
Company as the elected representatives of shareholders with both
eyes clearly focused on protecting the interests of
all shareholders.
If elected, Pelham expects that
its nominees will undertake a forensic investigation into the
activities of Management both prior to and during our involvement
as an activist and will hold former directors to account for any
breaches of duty and other acts of self-dealing or corporate
malfeasance that they authorized or permitted to occur on their
watch. We expect that this investigation would include challenging
the validity and legality of any change of control payments that
may have been authorized by Management in breach of their fiduciary
duties to the Company.
Vote Only the YELLOW Proxy "FOR" a
Better Future For Nickel 28
This vote is of critical importance to all of us as shareholders
of the Company and it is up to shareholders to protect the value of
their investment in Nickel 28. Next year, management will, through
vesting of stock it has already awarded itself (for no cash
consideration), gain ownership over approximately an additional 5%
of Nickel 28 and, if history is any guide, Management will continue
to further increase its ownership interest at shareholder expense.
Pelham fears that if shareholders
do not replace the incumbent Board this year, the situation will
become unsalvageable given Management's prospective ownership
interest.
Pelham welcomes the unsolicited
expressions of support it has received from so many shareholders to
date but, in order to drive needed change, this support must
translate into votes. Every vote counts. Nickel 28 shareholders are
urged to vote using only the YELLOW proxy – Pelham's form of proxy.
Our YELLOW form of proxy has been prepared as a
"universal" proxy, meaning that all of our nominees, as well
as the nominees of Management, are included as voting options. We
determined to provide shareholders with a universal proxy as the
practice of utilizing a universal proxy in a contested meeting is
becoming increasingly recognized as a governance best practice.
Even though Management was in possession of the identities of our
nominees and was made aware that the Meeting would be contested by
us, the Board chose not to provide for our nominees on their form
of proxy (for reasons that should be readily apparent to
shareholders). Accordingly, shareholders are able to vote for our
nominees or Management's nominees (or any combination thereof), on
the YELLOW Proxy ONLY. Pelham urges shareholders to vote only the
YELLOW Proxy, regardless of how you intend to vote, and disregard
any proxies or voting instruction forms received from
Management.
Time is of the essence. In order to ensure your vote
is counted at the Meeting, please ensure it is received prior to
the proxy voting deadline of 9:00 p.m.
(Eastern time) on June 7,
2023.
Even if you have already voted using a blue management proxy or
voting instruction form, you have every right to change your vote
and support the nomination of our nominees. A later-dated
YELLOW form of proxy or voting instruction form
automatically revokes any and all previously submitted forms of
proxy or voting instruction forms.
Shareholder Questions
For any questions or voting assistance, shareholders should
contact Pelham LP's strategic shareholder communications advisor
and proxy solicitation agent, Laurel Hill Advisory Group
("Laurel Hill") at
1-877-452-7184 (416-304-0211 outside North America) or by email at
assistance@laurelhill.com. Shareholders can also visit
savenickel28.com for more information, and sign-up to
stay up to date.
About Pelham
Pelham Investment Partners LP is private investment firm located
in New York, managed and founded
by Edward (Ned) Collery in 2021. We
are long-term and value-oriented investors. Pelham, the single largest shareholder of the
Company, has held an investment in Nickel 28 since the firm's
founding in 2021.
Additional Information
This news release is issued in connection with a solicitation of
proxies by or on behalf of Pelham
and not on behalf of management of Nickel 28. Pelham has filed an information circular dated
May 21, 2023 (the "Pelham
Circular"), which contains certain important prescribed
information concerning Pelham and
its nominees, as well as information about the background and
reasons for the solicitation. The Pelham Circular and YELLOW
form of proxy is available on the Company's SEDAR profile at
www.sedar.com.
Pelham has retained
Laurel Hill as its strategic
shareholder communications advisor and proxy solicitation agent.
All costs incurred for any solicitation will be borne directly by
Pelham. Notwithstanding the
foregoing, and to the extent legally permissible, Pelham may seek reimbursement from Nickel 28
for the expenses it incurs in connection with this solicitation,
including proxy solicitation expenses and legal fees, in connection
with a successful reconstitution of the Board. Pelham does not intend to submit the question
of such reimbursement to a vote of shareholders of the Company.
Pelham notes that it expects that
any such expenses will be substantially less than the expenses that
Management has forced the Company to incur to defend Management
from an otherwise avoidable proxy contest.
Proxies may be solicited by mail, facsimile, telephone,
telegraph, internet, in person, by advertisements and by any other
manner permitted by law.
No person is authorized to give information or to make any
representations by or on behalf of Pelham other than those contained in this
Circular and, if given or made, such information or representation
must not be relied upon as having been authorized by Pelham to be given or made.
Except as otherwise disclosed in the Pelham Circular, neither
Pelham nor, to its knowledge, any
of its 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
nor, to its knowledge, any of its 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 Meeting, other
than as set out herein or in the Pelham Circular.
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 news release may be obtained under Nickel 28's SEDAR
profile at www.sedar.com.
Cautionary Statement Regarding
Forward-Looking Information
Information disclosed in this news release may contain
forward-looking information. All statements and information, other
than statements of historical fact, included in this news release
contain forward-looking information. Statements containing
forward-looking 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 negative variations thereof. Statements
containing forward–looking information in this news release include
statements regarding activities, events or developments that
Pelham expects or anticipates may
occur in the future, expectations regarding the Meeting, and what
Pelham expects its nominees will
do if elected to the Board. Although Pelham believes that the expectations
reflected in statements containing forward-looking information made
by Pelham in this news release to
be 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 cautions that
the foregoing list of material facts and assumptions is not
exhaustive. Many of these assumptions are based on factors and
events that are not within the control of Pelham and there is no assurance that they
will prove to be correct. Accordingly, there can be no assurance
that the plans, intentions or expectations upon which statements
containing forward-looking information are based will occur or,
even if they do occur, will result in the plans, results or
performance expected. We caution readers of this news release not
to place undue reliance on forward-looking information contained in
this news release, which are not a guarantee of performance, events
or results and are subject to a number of risks, uncertainties and
other factors that could cause actual results, performance or
events to differ materially from those expressed or implied by such
forward-looking information. These factors include, among other
things, actions taken by the Company in connection with the
Meeting, risks under material contracts of the Company, the outcome
of any proceedings that may be commenced in connection with the
Meeting, the content of subsequent public disclosures by the
Company, general economic conditions, legislative or regulatory
changes, changes in capital or securities markets, and those risks
and uncertainties detailed in the continuous disclosure and other
filings of Nickel 28 with applicable Canadian securities
regulators. These are not necessarily all of the important factors
that could cause actual results to differ materially from those
expressed or implied in any of Pelham's forward-looking information. Other
unknown and unpredictable factors could also impact outcomes.
Statements containing forward-looking information in this news
release are based on Pelham'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 disclaims any obligation to
do so, except as required by applicable law.
__________________________________
|
1
Comparators: 18 Canadian reporting issuers in the mining sector
(nine TSX-listed and nine TSX-V listed, with similar market cap and
total assets to Nickel 28).
|
2 Based on
an analysis of the photos posted to the – currently public -
account @anthony.milewski between January 25, 2022 and April 8,
2023
|
3 For this
analysis we took the last to be disclosed of (i) the $1.92 per
share "implied value" of a Nickel 28 share as per Cobalt 27 Capital
Corp.'s filings; (ii) the average of the lowest two NPV values
provided for Ramu in management's various presentations up until
2023 plus the acquisition cost of the Company's royalty portfolio;
and (iii) $5.75 since the Company's March 29, 2023 press release
where they claimed the Company's assets would be valued at "almost"
$6.00 per share. We compared these values against the daily share
price.
|
|
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SOURCE Pelham Investment Partners LP