Equus Commences Legal Proceedings to Collect on Trulite Loan
May 04 2010 - 5:59PM
Business Wire
Equus Total Return, Inc. (NYSE: EQS) (“Equus” or the “Fund”)
today announced that it has filed a claim to collect $2.5 million
owing from Trulite, Inc. (“Trulite”), a portfolio company of Equus
that is led by three members of the “Committee to Enhance
Equus”/(Douglass Committee). Trulite defaulted on the loan on
January 26, 2010 and currently owes Equus the principal amount of
$2.3 million plus $200,000 in accumulated interest.
The loan to Trulite was originated by Paula Douglass, who until
March 2010 had been an officer of the Fund and a member of the
Fund’s Investment Committee. Despite the fact that Paula Douglass,
Jonathan Godshall and John White, the vice chairman and chairman of
Trulite, respectively, are on the Board of Directors of Trulite,
they have been nominated for directors at Equus by the Douglass
Committee, which is waging a costly proxy contest to regain control
of the Fund for Paula Douglass and her husband, Sam Douglass.
The conflict has been pointed out by two independent proxy
advisory firms, which recently noted the following:
“With respect to the Dissident’s [Douglass
Committee’s] non-incumbent nominees, Messrs. Godshall and White
serve as the vice chairman and chairman, respectively, of Trulite,
Inc. (“Trulite”), one of Equus’ portfolio companies. Paula Douglass
originated a $2.3 million loan to Trulite, on which Trulite
defaulted and upon which the Company [Equus] took action to collect
on April 23, 2010. We believe these
issues raise questions about whether certain of the [Douglass
Committee’s] non-incumbent nominees may take actions or have
interests that are not aligned with, or may, in fact, be inimical
to, the interests of shareholders.”- Glass Lewis & Co.,
April 28, 2010 (Bracketed language and underline emphasis
added)
“Another issue we have regarding this
[Douglass Committee’s] slate has to do with the presence of two
Trulite affiliated nominees, Jonathan Godshall and John White. We
agree that conflicts of interest could arise through their presence
on the board given Trulite’s default on the..debt it owes to
Equus.”- RiskMetrics Group, May 4, 2010 (Bracketed language
added)
Richard Bergner, Chairman of Equus, stated: “Despite repeated
promises by Trulite, it has failed to repay its obligation to Equus
in a timely manner so we are continuing to take the necessary steps
to collect what is owed to Equus’ shareholders. Instead of pressing
for collection and recovery of this failed investment, Sam and
Paula Douglass – through the Douglass Committee – have instead
sought to appoint Messrs. Godshall and White as well as Paula
Douglass to Equus’ Board of Directors. This is a serious potential
conflict of interest for the Douglass Committee.”
Equus urges shareholders to protect their investment in the Fund
by voting their WHITE
proxy card today. Shareholders needing assistance in voting their
WHITE proxy card can
call Georgeson Inc., toll-free at 866-821-2606 (banks and brokerage
firms should call 212-440-9800), or email equus@georgeson.com.
Shareholders also can find additional materials on the annual
meeting and how to vote on the Fund’s website at
www.equuscap.com.
About Equus
The Fund is a business development company that trades as a
closed-end fund on the New York Stock Exchange, under the symbol
"EQS." Additional information on the Fund may be obtained from the
Fund’s website at www.equuscap.com.
This press release may contain certain forward-looking
statements regarding future circumstances. These forward-looking
statements are based upon the Fund’s current expectations and
assumptions and are subject to various risks and uncertainties that
could cause actual results to differ materially from those
contemplated in such forward-looking statements, including, in
particular, the risks and uncertainties described in the Fund’s
filings with the Securities and Exchange Commission. Actual
results, events, and performance may differ. Readers are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as to the date hereof. The Fund undertakes no
obligation to release publicly any revisions to these
forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. The inclusion of any statement in this letter
does not constitute an admission by the Fund or any other person
that the events or circumstances described in such statements are
material.
Important Information
The Fund filed a definitive proxy statement concerning the 2010
Annual Meeting of Stockholders with the United States Securities
and Exchange Commission (“SEC”) on April 12, 2010. The Fund has
also filed other relevant documents with the SEC. The Fund advises
stockholders to read the definitive proxy statement, as well as the
other relevant documents filed with the SEC, because they contain
important information about the election of directors and any other
matters to be presented at the 2010 Annual Meeting of Stockholders.
Stockholders may obtain free copies of the definitive proxy
statement and the other documents the Fund files with the SEC at
the SEC’s website at www.sec.gov. They may also access a copy of
the Fund’s definitive proxy statement by accessing
www.equuscap.com. In addition, stockholders may obtain a free copy
of the definitive proxy statement and the other related documents
by contacting Georgeson Inc. by telephone toll-free at 866-821-2606
(banks and brokerage firms should call 212-440-9800), or by email
at equus@georgeson.com.
The Fund, its directors, some of its executive officers and
certain other of its employees are participants in the solicitation
of proxies in respect of the matters to be considered at the 2010
Annual Meeting of Stockholders. Information about the participants
is set forth in the definitive proxy statement. Information about
the participants’ direct or indirect interests in the matters to be
considered at the annual meeting is also contained in the proxy
statement referred to above.
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