Alexandria Minerals Sets the Record Straight on Eric Owens’ Termination and Unauthorized Financing Scheme
March 28 2018 - 4:26PM
On February 13, 2018, the Board of Alexandria Minerals Corporation
(TSX-V:AZX) (OTCQB:ALXDF) (Frankfurt:A9D) (“AZX” or the “Company”)
terminated Eric Owens as Chief Executive Officer for cause because,
among other things, he engaged in an unauthorized financing scheme
and accepted investors’ funds into his personal lawyer’s trust
account. These funds were illicitly obtained without the Board’s
approval and solicited to a limited network of investors selected
by Mr. Owens, including his friends and family. Mr. Owens
himself intended to invest in the financing at a time when he
possessed non-public information about a strategic transaction
under consideration by AZX.
Mr. Owens’ unauthorized financing scheme put prospective future
shareholders ahead of current shareholders by significantly
diluting their ownership at a price that was well below the
Company’s share price. Independent financial advisors reviewed Mr.
Owens’ financing scheme and unanimously concluded the terms were
more dilutive for the existing shareholders in comparison to other
options that the Board was considering.
Throughout the process, Mr. Owens’ actions have shown a blatant
disregard for the independent members of the Board and the
Company’s shareholders:
- Mr. Owens failed to present a formal proposal to the Board,
including any term sheets and analysis on the amount of funds to be
raised, compensation for brokers or finders and other matters
generally necessary for the Board to make such a decision.
- Mr. Owens failed to provide advice from an independent third
party financial advisor (as the Board did) to support his proposed
alternative.
- Mr. Owens signed two agency agreements to raise $21.5 million,
one at $0.06 per unit (consisting of one common share and one
warrant exercisable at $0.09 for two years) and the second at $0.10
per charity flow through share having an after tax cost to
investors in the range of approximately $0.03 to $0.035 per share.
Assuming a $0.09 strike price, with a $0.09 share price and a two
year expiration period, the warrant value would be approximately
$0.02. Since November 2017, AZX shares have traded in the
range of $0.055 to $0.115 per share.
- Mr. Owens received and deposited approximately $5 million of
funds (of which the Company is aware) in an account with his
personal lawyer’s office, despite not having authority or the
requisite Board approval to do so. Mr. Owens did so even after the
corporate counsel for AZX refused to open such an account due to
lack of Board authorization.
- An independent investigation conducted under the supervision of
the Special Committee, which ultimately resulted in Mr. Owens’
termination for cause, uncovered emails revealing that he was aware
that his actions required Board approval, but proceeded
regardless.
Although Mr. Owens voted in favour of establishing a Special
Committee to review an offer to merge the Company with another
Canadian company, he began to criticize the Special Committee when
it became clear that the Special Committee viewed the possible
transaction to be more favourable to Alexandria’s shareholders than
his unauthorized financing.
The independent financial advisors to the Board and the Special
Committee reviewed Mr. Owens’ proposed financing scheme and
compared the financing with values which might be achieved in a
merger. The advisors observed that the current shareholders would
be more diluted by Mr. Owens’ financing and that it was appropriate
for the Company to explore a possible sale or merger prior to
undertaking Mr. Owens’ proposed financing to fund AZX’s 2018
drilling program. INFOR Financial Inc. similarly recommended to Mr.
Owens that the shareholders of Alexandria should be given the
opportunity to opine on the merits of the proposed merger, which
would be completed at a premium to the market, before pursuing more
equity financings at a discount.
While the independent members of the Board have stood on the
side of AZX shareholders, Mr. Owens has stood for his own personal
enrichment and that of his associates by advancing an agenda that
would allow them to purchase shares at a cost per share that was
considerably less than the price Mr. Owens knew AZX could
potentially be worth in a merger. Messrs. Owens and Antonios Dan
Palikrousis have initiated legal action against certain independent
members of the Board to preserve Mr. Owens’ position as CEO. Mr.
Palikrousis was the beneficiary of one of the agency agreements
signed by Mr. Owens in furtherance of his financing scheme and
stood to collect hundreds of thousands of dollars’ worth of
Alexandria shares and options in finder’s fees according to its
terms. He is also the brother of a recently terminated Vice
President of AZX.
As previously announced, the Board of Directors of the Company
appointed a Special Committee of independent directors to, among
other things, undertake a comprehensive review of strategic
alternatives involving the Company. Among the alternatives being
considered by the Special Committee are financing transactions and
transactions that may result in the sale of the Company or
substantially all of its operating assets, subject to necessary
shareholder approvals. While there can be no assurance that
the Company will pursue or execute any specific action or
transaction, the date of the Meeting was set by the Board to allow
sufficient time to complete and announce the results of the review
prior to the Meeting.
Despite the unnecessary time and money that responding to Mr.
Owens’ actions will require, the Board remains focused on
continuing to deliver on its plan to maximize value for all
shareholders.
Advisors
Kingsdale Advisors is acting as strategic shareholder and
communications advisor and Bennett Jones LLP is acting as legal
advisor to the Special Committee of AZX. Sprott Capital Partners is
acting as financial advisor to the Board and Scotiabank is acting
as the financial advisor to the Special Committee of AZX.
About Alexandria Minerals Corporation
Alexandria Minerals Corporation is a Toronto-based junior gold
exploration and development company with strategic properties
located in the world-class mining districts of Val d’Or, Quebec,
Red Lake, Ontario and Snow Lake-Flin Flon, Manitoba. Alexandria’s
focus is on its flagship property, the large Cadillac Break
Property package in Val d’Or, which hosts important, near-surface,
gold resources along the prolific, gold-producing Cadillac Break,
all of which have significant growth potential.
WARNING: This News Release may contain forward-looking
statements. Forward-looking statements address future events and
conditions and therefore involve inherent risks and uncertainties.
Actual results may differ materially from those currently
anticipated in such statements. Alexandria Minerals Corporation
relies upon litigation protection for forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
For More Information:
Ian RobertsonExecutive Vice President, Communication
StrategyKingsdale AdvisorsDirect: 416-867-2333Cell:
647-621-2646Email: irobertson@kingsdaleadvisors.com
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