Banro Corp Issues Letter to Shareholders Urging Support FOR Banro's
Director Nominees
- Shareholders Are Urged to Vote the BLUE Proxy in support of
the six Banro Director nominees
TORONTO, ONTARIO--(Marketwired - Jun 17, 2014) - Banro
Corporation ("Banro" or the "Company") (TSX:BAA)(NYSEMKT:BAA)
issued the following letter to its shareholders from Board Chairman
Richard Brissenden and CEO John Clarke urging them to vote FOR all
of management's director nominees using only Banro's BLUE proxy:
Fellow shareholders,
We are pleased to invite you to Banro's Annual and Special
Meeting of Shareholders scheduled for Friday June 27, 2014. This
year your vote is of paramount importance to Banro as a dissident
shareholder, Liberty Street Capital Corp. with its 1,000 share
ownership position (.0004% of the Company's 252.10mm issued and
outstanding common shares), is seeking to take control of your
company without paying a premium for your shares and disrupt the
recent progress and the positive momentum we are building at Banro.
Your vote is imperative to show your support for Banro's director
nominees and your opposition to Liberty Street's opportunistic
actions. Protect your investment by voting your BLUE proxy FOR the election of all the
management nominees prior to June 25, 2014 at 4:00 p.m. (Toronto
time).
Your board and management remain focused on gold production from
the Twangiza and Namoya mines, with longer term objectives that
include the development of two additional major, wholly-owned gold
projects, Lugushwa and Kamituga. Banro has succeeded in building
Twangiza, the first new commercial gold mine in the Democratic
Republic of the Congo ("the DRC") in over 50 years, and is now
commissioning its second mine, Namoya, moving the company towards
being a mid-tier gold producer - all of this in one of the most
challenging regions of Africa. With these two mines, Banro is the
largest single employer in the region supporting thousands of
families.
Before Banro poured its first ounce of gold, the Banro
Foundation built schools, clinics, roads, bridges and safe potable
water facilities to increase the quality of life for our neighbours
in the region. The Banro Foundation is beginning new projects with
USAID to promote sustainable agriculture as a means of alleviating
poverty. As well, due to its success in building much needed social
infrastructure, it has recently been contracted by the government
of the DRC to build schools and health clinics across South Kivu
and Maniema provinces in the DRC.
Over the past 18 months, Banro has navigated the 35% collapse in
the price of gold, adjusting its capital/operating budgets to meet
conditions during this difficult period. During that same time,
Banro upgraded the Twangiza processing plant and constructed the
Namoya mine, which is being commissioned for commercial production
expected during Q3 2014. Banro is reaching a milestone in its
history where it will be able to reap the benefits afforded to a
multi-mine company. The inexperienced dissidents who are void of
mining skills are now seeking to take control of the Company to
deprive you of that benefit.
Do not hand control of Banro to a self-serving group of
dissidents with no defined strategy.
We have strong corporate governance with a renewed board of
highly experienced professionals.
The Liberty Street "cause" is "attributable to the corporate
governance practices at Banro". Our Board is dedicated to strong
corporate governance and has made a number of important changes to
align Banro with best practices, which have been endorsed by ISS -
a leading independent proxy advisory firm - by virtue of a
recently-issued report where they recommended shareholders vote FOR
all of Banro's nominees. These changes have also been the result of
our shareholder engagement efforts over the last 12 months and were
started well in advance of the disruptive actions of Liberty
Street. We have listened, engaged with our shareholder base, and
responded to shareholder concerns by changing the composition of
the Board to ensure it addressed these concerns. We heard you and
have taken action.
We announced several significant changes to the Board, including
the appointment of Richard Brissenden to the role of Chairman, and
the appointment of two new independent directors. The Liberty
Street "cause" and its messages are clearly out-of-date. A summary
of the recent changes to the Board include:
- Refreshing the Board by adding three new independent directors
over the past year: Richard Brissenden, Matthys Terblanche, and
Derrick Weyrauch.
- Ensuring the Board is majority independent, with 83% of
nominees serving as independent directors.
- Appointing Richard Brissenden as Chairman to provide new and
independent leadership.
- Establishing a fully independent Nominating Committee and
ensuring all key committees are now fully independent.
- Having incumbent directors resign from several outside
directorships to devote even more time to Banro.
"The proactive changes to the Board appear consistent with
the maturation of the company from an explorer and project
developer to an emerging mid-tier producer operating two mines in
the Democratic Republic of the Congo." - Andrew Breichmanas (BMO
Capital Markets) June 2, 2014.
The development and reorganization of our management team and
Board over the last year provides Banro with a team of high quality
industry professionals with extensive gold experience as well as a
track record of successful operations and government relationships
in the DRC. Our refreshed and driven Board has the skills and
experience to deliver the full potential of Banro's assets and
reflects our focus on good governance, solid management direction
and professional oversight.
Liberty Street has omitted critical facts in its circular
and has also included misleading data.
Liberty Street has failed to include material information in its
circular. It is a requirement under Canadian securities laws for
any proposed nominees of a board to disclose cease trade orders and
penalties against them:
- Liberty Street and Ed Nordholm, along with other parties, were
found by a court in Alberta to have breached the Alberta
Securities Act in 2013 in the context of a proxy fight, for
failing to disclose material information. Liberty Street failed
to disclose this information in the circular it sent to
you.
- Loudon Owen served as a director of Echelon Capital Corp.
("Echelon") between March 7, 2007 to September 26, 2013 and CEO and
CFO from January 16, 2013 until it was permanently delisted.
Echelon was cease-traded for failing to file audited financial
statements and a MD&A. Liberty Street failed to disclose
this information in the circular it sent to you.
- Thomas Pladsen served as a director of Cimatec Environment
Engineering Inc. ("Cimatec") from June 7, 2001 to November 29,
2007. Cimatec was cease-traded in December 2007 by the Ontario
Securities Commission for failing to file its interim financial
statements for the period ended September 30, 2007 and its audited
financial statements for the year ended December 31, 2007.
Liberty Street failed to disclose this information in the
circular it sent to you.
- Thomas Pladsen also served as a director of Tengtu
International Corp. ("Tengtu") from January 20, 2004 to November
21, 2005. Tengtu was cease-traded on October 2, 2006 for failing to
file audited and interim financial statements, as well as an
MD&A, for periods when Thomas Pladsen was a director.
Liberty Street failed to disclose this information in the
circular it sent to you.
Liberty Street has misguided Banro's shareholders. The dissident
circular presents a mislabelled graph, "Banro Corporation (TSX:BAA)
Total Shareholder Return (3 Years) vs Comparables" as evidence of
Banro's performance over the last three years. The graph only shows
two years of Total Shareholder Return data. In addition to the
clear error, the "Comparables" used to present this evidence are
not true peers of Banro. Osisko Mining's primary assets are located
in Ontario and Quebec. The market cap of Randgold is over 60 times
larger than Banro. These are vastly different circumstances than
Banro's circumstances. An honest comparison would show Banro's
performance against gold mining companies of similar trading size,
operating in recently-established democratic systems. In addition,
the performance of Osisko has included a takeover premium of
approximately 60%. This is an ill thought-out comparison and is
misleading.
The dissident is being highly opportunistic by seeking to
take control of Banro with no defined strategy and is proposing
nominees with limited experience.
Liberty Street - which owns just 1,000 shares which are
ineligible to vote - is proposing to take over the entire
board with a group of nominees that has limited mining experience,
no gold production experience, no technical background and several
candidates with no public board experience. Only four of the eight
dissident nominees have previously served on the board of a public
company and only three dissident nominees have served as an
executive of a public company. The dissident nominees lack
significant gold mining experience. Other than Thomas Pladsen, who
has served as an executive at several gold exploration companies,
and Loudon Owen, who has served as a director of gold exploration
companies, no dissident nominee has significant experience in gold
mining and none have a geological or technical background.
In addition, with their past interrelationships the ability of
the dissident nominees to act independently of each other is
questionable:
- Edwin Nordholm and Loudon Owen were directors of The Fight
Network Inc. which declared bankruptcy in October 2010.
- Edwin Nordholm and Loudon Owen were directors of Hangfeng
Evergreen Inc. while Niral Merchant was CFO. Hangfeng was cease
traded in February 2014 and subsequently delisted from the TSX in
June 2014.
- Edwin Nordholm, Loudon Owen and Thomas Plasden served together
on the board of Posera-HDX.
- Edwin Nordholm is the Managing Director of Liberty Street
Capital, which is jointly owned by Loudon Owen and Edwin
Nordholm.
- Loudon Owen, Niral Merchant and Thomas Pladsen together were
involved in a potential qualifying transaction with Imran Patel's
Congo Mineral Resources Sprl.
In its sparse circular, Liberty Street has not put forth a
strategy or business plan and is simply attempting to take control
of Banro's prime assets with a team that lacks the necessary
experience.
Banro has a clear strategy and is at a critical point in its
life cycle, with the Company poised to enhance long-term value for
shareholders.
Banro is within months of transforming into a company with two
operating gold mines generating robust cash flow. Banro's goals
include:
- An intense focus on managing cash flow and debt
repayments.
- Continued waste reduction and cost containment, including
ongoing review of all contracts, expenditures and budgets at its
Namoya and Twangiza mines.
- Optimizing all processes to contain costs.
- Increasing throughput and recoveries at the Twangiza mine and
commence commercial production at the Namoya mine in Q3 2014.
- Continued board evolution commensurate with the planned growth
and evolution of the operations.
We ask that Liberty Street take the following steps to ensure
that shareholders are fully informed about the material omissions
and deficiencies in its circular:
- Liberty Street must issue a revised dissident circular to all
shareholders no later than the close of business day on Wednesday,
June 18, 2014 with the corrected information clearly outlined on
the front cover, as is normal practice when such fundamental errors
occur.
- The revised dissident circular must be sent by courier to all
shareholders no later than noon on Friday, June 20, 2014 to ensure
that they are properly informed before the proxy voting deadline on
Wednesday, June 25, 2014.
- All proxies solicited by Liberty Street must be dated after
receipt of the revised dissident circular in order to ensure that
shareholders have access to factually correct information.
Protect your investment - Vote your BLUE proxy
today!
We urge you - our valued shareholder - to protect your
investment and reject Liberty Street's attempt to take control of
your company.
Regardless of how many shares you own, your vote is important in
order to send a message to Liberty Street that you support the
current Board and the Company's bright future. It is crucial that
you vote your BLUE
proxy today. If you have already voted, you can still change your
vote, simply by voting your BLUE proxy today. Your later
dated BLUE proxy
will replace any prior dated proxy you may have voted and will
count.
Your support is critical to delivering on our plans and we ask
you to support all resolutions at the meeting. If you have any
questions or need assistance in voting your proxy, please contact
our proxy solicitor, Kingsdale Shareholder Services, toll free in
North America (1-866-851-3214) or call collect from outside North
America at 416-867-2272 or by email at
contactus@kingsdaleshareholder.com.
Thank you for your continued support of Banro.
Banro Corporation is a Canadian gold mining company
focused on production from the Twangiza mine, which began
commercial production September 1, 2012, and completion of its
second gold mine at Namoya, located approximately 200 kilometres
southwest of the Twangiza gold mine. The Company's longer term
objectives include the development of two additional major,
wholly-owned gold projects, Lugushwa and Kamituga. The four
projects, each of which has a mining license, are located along the
210 kilometre long Twangiza-Namoya gold belt in the South Kivu and
Maniema provinces of the Democratic Republic of the Congo (the
"DRC"). Led by a proven management team with extensive gold and
African experience, the initial focus of the Company is on the
mining of oxide material, which has a low capital intensity to
develop but also attracts a lower technical and financial risk to
the Company. All business activities are followed in a socially and
environmentally responsible manner.
For further Banro information, please visit www.banro.com.
Banro CorporationNaomi NemethInvestor Relations+1 (416) 366-9189
or +1-800-714-7938, Ext. 2802info@banro.comFollow the Company on
Twitter @banrocorp
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