Leading Independent Advisory Firm Recommends Shareholders Reject Dissident Attempt to Take Control of Aberdeen International
- ISS highlights that under the current board Aberdeen has outperformed Market Vectors Junior Gold Miners ETF and steadily reduced compensation for three straight years
- Warns inexperienced dissident slate may put company at a higher risk
TORONTO, ONTARIO--(Marketwired - Jan 19, 2015) - Aberdeen International Inc. (TSX:AAB) comments on the Friday January 16, 2015 report by independent proxy advisory firm Institutional Shareholder Services ("ISS"), recommending that shareholders reject Ryan Morris' attempt to take control of Aberdeen's board of directors.
In its recommendation ISS highlighted the success of the current board in the midst of a challenging mining market and the need for strong, experienced leadership:
- Outperformed the Market Vectors Junior Gold Miners ETF over 1-, 3- and 5-year periods by approximately 60.4%, 5.0% and 23.1% respectively.
- Total compensation for the company's executives has steadily decreased over the past three years.
After examining Ryan's slate of dissident nominees and their plan ISS warned:
- "…the relatively less experienced dissident slate which appears to have little mining and board experience of Canadian public companies overall, if elected as a whole, may put the company at a higher risk in terms of business operation and strategic planning."
- The dissident plan is "short-term in nature".
- "It appears that the dissident may intend to engage in vote buying for this proxy contest… Such conduct is contrary to the best governance practice and may incentivize brokers to solicit votes for the dissident with biased advice to their clients, thereby creating an uneven playing ground for this proxy contest."
Aberdeen adds to ISS' warning by cautioning of the significant risks to all shareholders if dissident Ryan Morris is elected and the disruptive and destructive effect he will have:
- Ryan's interest is directly opposed to the interests of all other long-term shareholders. Ryan only really became interested in Aberdeen in the last three months and has admitted he wants to make a short-term profit and get out of his stock by liquidating as much of the company as he can in a fire sale. While this may make sense for Ryan because he only bought his stock position recently at $0.15 1/2 per share, it comes at the expense of all other long-term shareholders.
- Ryan has a track record of value destruction. Since 2010, Ryan's fund Meson Capital has returned a cumulative underperformance against the S&P 500 of -110.5% as of September 30, 2014. As Chairman at Lucas Energy the company had negative cumulative total shareholder returns of -81.69% while the S&P 500 Index returned 61.44%. As a result, Ryan left as chairman and eventually resigned from the board.
- Ryan says he can return cash to shareholders but the reality is when Ryan is done shareholders will be left with a small taxable dividend and a worthless share. Due to Ryan's "scorched wallet" campaign, the costs to take over Aberdeen will eat up most of the remaining value of Aberdeen's liquid stock holdings. His plan says that shareholders and Aberdeen will pick up the tab for his expenses, including costly lawyers' fees and vote buying. His course of action will also trigger change of control provisions -which he claims to worry about - leading to additional transaction costs at the expense of shareholders.
- Ryan and his hand-picked nominees are not qualified and lack the expertise needed to create shareholder value. None of them have served as a director or executive of a mining company. Only one has director or management experience with a Canadian public company
In contrast, Aberdeen reiterates the only way to increase long-term shareholder value in the midst of challenging times is to vote for the current board with over 200 years of collective senior management, operations, public markets and finance experience in the mining sector and their five-point plan for value creation:
- Buy back shares
- Cut costs
- Focus the investment strategy to earn income as well as capital returns
- Further enhance governance
- Enhance investment portfolio disclosure and build market momentum
Aberdeen specifically indicates that mission critical to its plan for long-term value creation for all shareholders is continuing with the experienced leadership of Stan Bharti as Executive Chairman. The company notes the integral roles he has played in Aberdeen's successful investments, including:
- Aberdeen started as an investment company with a $10 million secured, convertible, royalty loan to Simmers & Jack in connection with which Aberdeen also initially received a graduated net smelter return royalty on the Buffels gold mine and First Uranium's Mine Waste Solutions tailings recovery project. Aberdeen only had access to this investment opportunity due to the relationship between Stan Bharti and the Simmers & Jack management team at the time. This investment ultimately returned a profit of about $45 million for Aberdeen.
- In 2008, the then management team of Sulliden Gold approached Mr. Bharti to assist Sulliden Gold with the resolution of outstanding title disputes and to lead the development of the promising Shahuindo gold project. Aberdeen had the opportunity to invest into Sulliden Gold as Sulliden Gold entered the Forbes & Manhattan ("F&M") Group of Companies. This investment continues to be the cornerstone of the Aberdeen portfolio and has gained approximately 84% to date.
- The major shareholders of Belo Sun Mining asked Mr. Bharti and F&M to take the reins of the company to bring new energy into the company and lead the development of the Volta Grande gold project in Brazil. Aberdeen invested into Belo Sun as it entered the F&M Group and realized a gain of approximately 220% over 2.2 years on this investment.
- In the wake of the enormous triumph of Consolidated Thompson Iron Mines being sold to Cliffs for $4.7 billion, Mr. Bharti faciliated the launch of Alderon Iron Mines. As a result of Mr. Bharti's role, Aberdeen was able to invest into Alderon at the ground level and exited the investment for a 40% gain.
- Using his strong technical expertise, Mr. Bharti recognized the potential in the Tabakoto and Segala gold mines and led Avion Gold to purchase these projects and put them back into production. Investing alongside this success story, Aberdeen realized a profit of about $11.2 million on a total investment of only $6.3 million - a 177% gain over only 3.2 years.
Aberdeen can also highlight numerous other examples as Mr. Bharti has an unequalled series of "wins" during the last ten years. Aberdeen is the public vehicle through which shareholders have participated in these successes and gain access to Mr. Bharti's next deal. In proposing to liquidate the Aberdeen portfolio at the bottom of the commodities cycle, Ryan Morris obviously does not understand the mining industry or the reasons people invest in junior mining companies.
Aberdeen would like to thank all shareholders who have voted their BLUE proxy. If you have not yet voted, we encourage you to read our recent letter outlining the truth about Ryan's plan to destroy long-term value. A copy of the letter can be found here: http://media3.marketwire.com/docs/AberdeenShareholderLetter.pdf
Shareholders are urged to vote their BLUE proxy in favour of Aberdeen's current board of directors prior to the proxy cut-off at 11:00 a.m. (Toronto time) on January 30, 2015:
Proxy Voting Instructions
Regardless of how many shares you own it's imperative that you vote your BLUE proxy:
1. AGAINST the first resolution to remove the current board
2. FOR Aberdeen's seven highly qualified current board nominees
3. WITHHOLD votes from Ryan's dissident slate of nominees
Make sure you vote well in advance of the proxy cut-off at 11:00 a.m. EST on January 30th, 2015 using the control number on the BLUE proxy or voting instruction form. Even if you have voted the Gold proxy, it is not too late. A later-dated BLUE proxy will replace any previously voted Gold proxy.
If you have any questions or need assistance in voting your BLUE proxy or voting instruction form, please contact Kingsdale Shareholder Services, at 1-866-851-9601 (toll-free in North America), or 416-867-2272 (collect calls accepted) outside North America or by email at contactus@kingsdaleshareholder.com.
About Aberdeen
Aberdeen is a publicly traded global investment and merchant banking company focused on small cap companies in the resource sector. Aberdeen will seek to acquire significant equity participation in pre-IPO and/or early stage public resource companies with undeveloped or undervalued high-quality resources. Aberdeen will focus on companies that: (i) are in need of managerial, technical and financial resources to realize their full potential; (ii) are undervalued in foreign capital markets; and/or (iii) operate in jurisdictions with low to moderate local political risk. Aberdeen will seek to provide value-added managerial and board advisory services to companies.
For additional information, please visit our website at www.aberdeeninternational.ca and follow us on Facebook and Twitter: AberdeenAAB.
Cautionary Note
Except for statements of historical fact contained herein, the information in this press release constitutes "forward-looking information" within the meaning of Canadian securities law. Such forward-looking information may be identified by words such as "plans", "proposes", "estimates", "intends", "expects", "believes", "may", "will" and include without limitation, the implementation of the Company's action plan, statements regarding the business activities of the Company and possible investment opportunities, the potential of certain investments, the ability of the Company to generate additional value for shareholders, past success as an indicator of future success. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include, among others, metal prices, competition, financing risks, acquisition risks, risks inherent in the mining industry, regulatory risks and other risks described in Aberdeen's annual information form. Most of these factors are outside the control of the Company. Investors are cautioned not to put undue reliance on forward-looking information. Except as otherwise required by applicable securities statutes or regulation, the Company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.
Contact
Investor Inquiries:
Kingsdale Shareholder Services
North American Toll Free: 1-866-851-9601
International Collect Call: 416-867-2272
contactus@kingsdaleshareholder.com
For Media Inquiries:
Ian Robertson
Vice President, Communications
Kingsdale Shareholder Services
Direct: 416-867-2333 or Cell: 647-621-2646
irobertson@kingsdaleshareholder.com
Mike McAllister
Manager, Investor Relations
Aberdeen International Inc.
+1 416-309-2134
info@aberdeeninternational.ca
David Stein
President and Chief Executive Officer
Aberdeen International Inc.
+1 416-861-5812
dstein@aberdeeninternational.ca