- G2S2 requisitions special meeting of SOT unitholders
- Nominates four highly experienced and independent nominees
- Calls for further changes of board composition by removing
conflicted trustees, amending Declaration of Trust to right-size
the number of SLAM's board nomination rights from two trustees to
one
- Outlines strategic plan to enhance capital allocation, align
unitholder interests through improved board oversight and conduct
an in-depth review of each property to determine its highest and
best use
- Cautions fellow unitholders that hastily announced "strategic
review" by conflicted and entrenched existing trustees of the REIT
is a transparent and self-interested delay tactic
HALIFAX,
NS, Oct. 26, 2022 /CNW/ - G2S2 Capital Inc.
and its wholly owned subsidiary, Armco Alberta Inc. ("G2S2"), the
largest unitholder of Slate Office REIT ("SOT", or "the REIT")
(TSX: SOT.UN), announced today that G2S2 has requisitioned a
special meeting of Slate Office REIT unitholders (the "Meeting") to
1) refresh the board of trustees (the "Board") by adding four
highly experienced and independent nominees to the Board, 2)
remove five conflicted and entrenched existing trustees from the
Board, 3) amend the REIT's Declaration of Trust to reduce Slate
Asset Management's ("SLAM") board nomination rights from two
trustees to one, and 4) conduct an advisory vote requesting the
Board to take all actions required to internalize the asset and
property management functions of the REIT rather than having such
functions managed by an external manager (the "Requisition").
G2S2's nominees are George Armoyan,
Jean-Charles Angers, Sharon Stern and Ben
Vendittelli. G2S2 also releases its strategic plan to narrow
the almost 50% trading discount of the REIT units to management's
stated net asset value ("NAV") of the REIT, and to restore
unitholder value.
"We have watched as SLAM has mismanaged this REIT over the past
number of years. Transactions that don't add value, slashing the
distribution by 50%, fees on top of fees," said George Armoyan, Executive Chairman of G2S2.
"SLAM owns less than 10% of the REIT but they have set it up to
have complete control. They are the only unitholder that is making
any money from this investment."
"The 'strategic review' that was announced by the REIT after
G2S2 publicly announced its intention to requisition a meeting to
hold the Board accountable is just a self-interested delay tactic
by entrenched and conflicted trustees. They are acting in the
interests of SLAM, the REIT's external manager, rather than all
unitholders," added Mr. Armoyan. "The strategic review should be
postponed until all unitholders decide the future direction of the
REIT at the Meeting. We have no confidence in the ability of the
existing trustees to conduct an independent strategic review that
results in a transaction beneficial to all unitholders. These are
the same trustees who only days ago approved and closed a highly
dilutive C$45 million convertible
debenture issuance at a conversion price of $5.50 per trust unit, significantly below
management's stated NAV of $8.71 per
trust unit."
SOT indicated in their recent press release that G2S2 has
expressed an interest in acquiring certain Atlantic Canada assets from the REIT. This is
not G2S2's intent and is not the focus of our requisition. As
prudent investors, we often tour the properties of companies we
invest in. Our hope was to identify whether the market's glaring
discount to net asset value reflects the quality of these assets,
or management's poor performance. We now know it is the latter.
G2S2 is wholly focused on unlocking value for all SOT unitholders
and we have been left with no choice but to requisition a
unitholder meeting due to management's inaction and the recently
announced dilutive convertible debenture transaction.
G2S2's Strategy to Unlock Significant Value for SOT
Unitholders
1. Refresh Board of Trustees and Conduct Compensation
Review: G2S2 is nominating four highly qualified and truly
independent trustees to replace Thomas
Farley (Chair), Monty Baker,
Michael Fitzgerald, and Brady Welch. In addition, G2S2 is seeking to
remove Blair Welch as a trustee. So
long as the founders of SOT's external manager sit on its board and
exert influence over the selection of so-called "independent
trustees", the Board will never be truly independent. G2S2's
nominees will reassess trustee compensation to ensure that trustees
are aligned with unitholder interests. G2S2 is also proposing a
resolution to decrease the number of board nomination rights
afforded to SLAM from two trustees to one.
2. Enhance Capital Allocation: In-depth review of cost
structure and financing, banking & hedging arrangements. Cost
savings will be directed towards accretive,
unitholder-friendly capital allocation policies such as unit
repurchases. The REIT must be allowed to follow through on the most
capital accretive transactions, regardless of the fee impact to its
external manager. Transactions that increase gross book value (and
therefore the fees of the REIT's external manager) should not be
pursued unless such transactions are accretive to the REIT's
unitholders.
3. Address One-Sided Management Agreement: Advisory
resolution to request the board to internalize the asset and
property management functions of the REIT rather than having such
functions managed by an external manager. At a minimum, conduct
exhaustive review of all clauses in the external management
agreement. Clauses that conflict with unitholder interests should
be amended to within market terms in the best interests of
unitholders.
4. Assessment of Portfolio to Unlock Hidden Value:
Thorough review of each and every property in the portfolio to
determine its highest and best use. Value creation initiatives
could include repurposing, densification, or dispositions.
G2S2's Highly Qualified and Independent Board
Nominees
G2S2 has assembled four talented and independent nominees with
distinguished backgrounds to revitalize SOT's board of trustees.
This is a crucial first step in renewing unitholder confidence,
promoting effective governance, and acting in the best interest of
all unitholders. These nominees will replace Thomas Farley (Chair), Monty Baker, Michael
Fitzgerald, and Brady Welch
George Armoyan is the
Executive Chairman of G2S2 Capital Inc., a multi-strategy
value-oriented investment company focused on identifying
undervalued companies and the Chairman, President & CEO of
Clarke Inc.
- Entrepreneur with more than 40 years of extensive experience in
real estate investing and development, M&A, and turnaround
& distressed investing
- Successfully founded and grew numerous businesses in a variety
of industries with a proven track record of creating shareholder
value at several public companies through restructuring
operations
- Also serves on the board of Clarke Inc. (TSX: CKI), Calfrac
Well Services (TSX: CFW), and Bonavista Energy
- Founding Partner of Creative Destruction Labs Atlantic, a
nonprofit organization focused on scalable seed-stage science and
technology-based companies
- Mr. Armoyan holds a Bachelor's Degree from Dalhousie University in Engineering
Jean-Charles Angers was
the Managing Director of RBC Capital Markets Real Estate Group in
Quebec until August, 2022, where
he played a pivotal role in developing the group into the real
estate industry's dominant institutional investment bank.
- Over 40 years of experience in the sale and financing of real
estate businesses and properties
- Directed many sizeable transactions, in all asset classes; and,
strategically assisted his clients through various economic and
real estate cycles
- Member of the board of the Resources for Children with Diabetes
Foundation (FRED) where over the past 21 years he has helped raise
over $3m
- Previously sat on the board of Institut de Développement
Urbain
- Mr. Angers holds Bachelor's Degree from McGill University in Civil Engineering and an MBA
from Western University
Sharon Stern is the
President of Eastmore Management and Metro Investments, two
organizations focused on value creation through acquisition,
development and management of multi-residential and commercial
properties in the downtown core of Montreal.
- Previously a Board member at Cedar Realty Trust (NYSE: CDR),
where she oversaw the strategic alternatives process that resulted
in the successful sale and merger of over $1.2 billion of assets, representing a premium of
over 70% to shareholders
- Prior to founding Eastmore Management, Sharon worked in
Strategy and Corporate Development for the Business Development
Bank of Canada
- Also serves on the Board of McGill
University's Desautels Faculty of Management, as well as the
Board of Desautels Capital Management, is a judge and mentor at
McGill's Dobson Centre for
Entrepreneurship and serves on the Board of ProMontreal
Entrepreneurs
- Active angel investor in startup organizations
- Ms. Stern holds a Bachelor's Degree from McGill University in Economics and World Religions
and a Master's Degree from Brown
University in Economic Policy
Ben Vendittelli is the
Managing Partner at Mach Capital with over 20 years of Capital
Markets experience and is a director of numerous private company
boards. Mach Capital is the sister company of Groupe Mach, one of
the largest real estate owners and operators in Quebec.
- Played a principal role in the privatization of Cominar REIT,
previously the largest commercial property owner in the Province of
Quebec
- Previously the Chief Executive Office of Laurentian Bank
Securities, Laurentian Bank's wholly owned Capital Markets
subsidiary, as well as a member of its board of directors
- Extensive experience in strategic planning, governance,
transformation and risk management including oversight of
$5B in financial inventory and a
participant in the bank's credit committee
- Managed a team of 240 professionals, including sales &
trading, research, retail brokerage, government debt issuance,
investment banking, and operations
- Mr. Vendittelli holds an MBA in Investment Management from the
John Molson School of Business and was named to Concordia University's 50 under 50, as well as
being a CFA charter holder
INFORMATION CONCERNING THE CONCERNED UNITHOLDER
NOMINEES
As set out in the Requisition, G2S2 has nominated George Armoyan, Jean-Charles Angers, Sharon Stern and Ben
Vendittelli (the "Concerned Unitholder Nominees") to serve
as new independent trustees to the Board until the next annual
meeting of unitholders, or until their successors are elected or
appointed in accordance with applicable law. The table below sets
out, in respect of each Concerned Unitholder Nominee, his or her
name, province and country of residence and his or her principal
occupation, business or employment within the five preceding
years.
Name, Province or
State and Country of Residence
|
Present Principal
Occupation, Business or Employment and Principal Occupation,
Business or Employment During the Preceding Five
Years
|
George
Armoyan Nova Scotia, Canada
|
Executive Chairman and
Secretary of G2S2 Capital Inc. (and its predecessor) from 1997 to
present; President of Armco Capital Inc. from 2017 to present; and
Chairman, President & CEO of Clarke Inc. from 2020 to
present
|
Jean-Charles
Angers Quebec, Canada
|
Managing Director of
RBC Capital Markets Real Estate Group in Quebec from 2003 to 2022;
formerly served in various leadership roles in the RBC Capital
Markets Real Estate Group
|
Sharon
Stern Quebec, Canada
|
President of Eastmore
Management and Metro Investments from 2015 to present; formerly
worked in Strategy and Corporate Development for the Business
Development Bank of Canada
|
Ben
Vendittelli Quebec, Canada
|
Managing Partner at
Mach Capital from 2019 to present; formerly, Chief Executive
Officer of Laurentian Bank Securities, Laurentian Bank's wholly
owned Capital Markets subsidiary, as well as a member of its board
of directors from 2018 to 2019; formerly served in various
executive roles at Laurentian Bank Securities from 2008 to
2017
|
Other Boards of Reporting Issuers
As at the date hereof, Mr. Armoyan is a director of Clarke Inc.
(TSX: CKI) and Calfrac Well Services Ltd (TSX: CFW). No other
Concerned Unitholder Nominee is currently a director or trustee of
any other reporting issuer.
Other Information Concerning the Concerned Unitholders
Nominees
To the knowledge of G2S2, no Concerned Unitholder Nominee is, at
the date hereof, or has been, within ten (10) years before the date
hereof: (a) a director, chief executive officer or chief financial
officer of any company that (i) was subject to a cease trade order,
an order similar to a cease trade order or an order that denied the
relevant company access to any exemption under securities
legislation that was in effect for a period of more than thirty
(30) consecutive days (each, an "order"), in each case that was
issued while the Concerned Unitholder Nominee was acting in the
capacity as director, chief executive officer or chief financial
officer, or (ii) was subject to an order that was issued after the
Concerned Unitholder Nominee ceased to be a director, chief
executive officer or chief financial officer and which resulted
from an event that occurred while that person was acting in the
capacity as director, chief executive officer or chief financial
officer; (b) a director or executive officer of any company that,
while such Concerned Unitholder Nominee was acting in that
capacity, or within one (1) year of such Concerned Unitholder
Nominee ceasing to act in that capacity, became bankrupt, made a
proposal under any legislation relating to bankruptcy or insolvency
or was subject to or instituted any proceedings, arrangement or
compromise with creditors or had a receiver, receiver manager or
trustee appointed to hold its assets; or (c) someone who became
bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency, or became subject to or instituted any
proceedings, arrangement or compromise with creditors, or had a
receiver, receiver manager or trustee appointed to hold the assets
of such Concerned Unitholder Nominee.
To the knowledge of G2S2, as at the date hereof, no Concerned
Unitholder Nominee has been subject to: (a) any penalties or
sanctions imposed by a court relating to securities legislation, or
by a securities regulatory authority, or has entered into a
settlement agreement with a securities regulatory authority; or (b)
any other penalties or sanctions imposed by a court or regulatory
body that would likely be considered important to a reasonable
securityholder in deciding whether to vote for a Concerned
Unitholder Nominee.
To the knowledge of G2S2, none of the directors or officers of
G2S2, or any associates or affiliates of the foregoing, or any of
the Concerned Unitholder Nominees or their respective associates or
affiliates, has: (a) any material interest, direct or indirect, in
any transaction since the commencement of the REIT's most recently
completed financial year or in any proposed transaction which has
materially affected or will materially affect the REIT or any of
its subsidiaries; or (b) any material interest, direct or indirect,
by way of beneficial ownership of securities or otherwise, in any
matter proposed to be acted on at the Meeting, other than the
re-constitution of the Board.
Mr. Armoyan beneficially owns and controls 12,703,400 units
representing approximately 15.84% of the outstanding units and
$7,100,000 principal amount of 7.50%
Convertible Unsecured Subordinated Debentures. The units and
debentures are held by Armco Alberta Inc., a wholly-owned
subsidiary of G2S2. G2S2 is controlled by George & Simé
Armoyan. While the other Concerned Unitholder Nominees may
purchase units in the future, none of the Concerned Unitholder
Nominees currently hold any units of the REIT.
Additional Information
The information contained in this news release does not and is
not meant to constitute a solicitation of a proxy within the
meaning of applicable securities laws. Although G2S2 has
requisitioned the Meeting, there is currently no record or meeting
date and unitholders are not being asked at this time to execute a
proxy in favour of the Concerned Unitholder Nominees or any other
resolutions set forth in the Requisition. In connection with the
Meeting, G2S2 may file a dissident information circular (the
"Information Circular") in due course in compliance with applicable
securities laws.
Notwithstanding the foregoing, G2S2 is voluntarily providing the
disclosure required under section 9.2(4) of National Instrument
51-102 – Continuous Disclosure Obligations in accordance
with securities laws applicable to public broadcast
solicitations.
This news release and any solicitation made by G2S2 in advance
of the Meeting is, or will be, as applicable, made by G2S2 and not
by or on behalf of the management of the REIT. All costs incurred
for any solicitation will be borne by G2S2, provided that, subject
to applicable law, G2S2 may seek reimbursement from the REIT of
G2S2's out-of-pocket expenses, including proxy solicitation
expenses and legal fees, incurred in connection with a successful
reconstitution of the Board.
G2S2 is not soliciting proxies in connection with the Meeting at
this time, and unitholders are not being asked at this time to
execute proxies in favour of the Concerned Unitholder Nominees (in
respect of the Meeting) or any other resolution set forth in the
Requisition. Proxies may be solicited by G2S2 pursuant to an
information circular sent to unitholders after which solicitations
may be made by or on behalf of G2S2, by mail, telephone, fax, email
or other electronic means as well as by newspaper or other media
advertising, and in person by directors, officers and employees of
G2S2, who will not be specifically remunerated therefor. G2S2 may
also solicit proxies in reliance upon the public broadcast
exemption to the solicitation requirements under applicable
Canadian corporate and securities laws, conveyed by way of public
broadcast, including through press releases, speeches or
publications, and by any other manner permitted under applicable
Canadian laws. G2S2 may engage the services of one or more agents
and authorize other persons to assist in soliciting proxies on
behalf of G2S2.
G2S2 has retained Morrow Sodali Inc. ("Morrow Sodali") as its
strategic shareholder communications and proxy advisor to assist
G2S2 in soliciting unitholders should G2S2 commence a formal
solicitation of proxies. Morrow Sodali's responsibilities will
principally include advising G2S2 on governance best practices,
where applicable, liaising with proxy advisory firms, developing
and implementing unitholder communication and engagement
strategies, and advising with respect to meeting and proxy
protocol.
G2S2 is not requesting that SOT unitholders submit a proxy at
this time. Once G2S2 has commenced a formal solicitation of proxies
in connection with the Meeting, proxies may be revoked by
instrument in writing by the unitholder giving the proxy or by its
duly authorized officer or attorney, or in any other manner
permitted by law or the declaration of trust of SOT. None of G2S2
or, to its knowledge, any of its associates or affiliates, has any
material interest, direct or indirect, (i) in any transaction since
the beginning of SOT's most recently completed financial year or in
any proposed transaction that has materially affected or would
materially affect SOT or any of its subsidiaries; or (ii) by way of
beneficial ownership of securities or otherwise, in any matter
proposed to be acted on at the Meeting, other than the election of
trustees to the Board.
SOT's principal office address is 121 King Street West, Suite
200, Toronto, Ontario, M5H 3T9. A
copy of this news release may be obtained on SOT's SEDAR profile at
www.sedar.com.
Advisors
G2S2 has retained Morrow Sodali as its strategic shareholder
services advisor. Bennett Jones LLP is acting as legal
counsel to G2S2.
About G2S2
G2S2 Capital Inc. is a privately held investment holding company
focused on creating value across a variety of businesses with a
long term horizon. G2S2 is incorporated under the laws of
Canada. G2S2 is controlled by
George & Simé Armoyan. G2S2's registered address is 168 Hobsons
Lake Drive, Suite 300, Halifax, NS
B3S 0G4.
SOURCE G2S2 Capital Inc.