Board of Directors unanimously recommends that
Kobex Shareholders
vote the WHITE form of proxy against,
and withhold their votes from, all of the Kingsway
resolutions
VANCOUVER, Oct. 8,
2015 /CNW/ - Kobex Capital Corp. (TSX-V:KXM) (the "Company"
or "Kobex") announced today that it has filed and is mailing a
management information circular dated October 6, 2015 in connection with the special
meeting of shareholders of the Company (the "Kobex Shareholders")
scheduled to be held at noon (Toronto time) on Tuesday, November 17, 2015 (the "Special
Meeting").
The Special Meeting was called as a result of the
requisition received by the Company on September 17, 2015 from Kingsway Financial
Services Inc. ("Kingsway") to consider the resolutions put forth by
Kingsway providing, among other things, for the removal from office
of all of the existing directors of the Company and their
replacement by five (5) Kingsway nominees, or alternatively, the
increase in the size of the board of directors of Kobex (the
"Board") to nine (9) and the election of all five (5) of the
Kingsway nominees.
The Board unanimously recommends that Kobex
Shareholders reject changes to the current Board and vote the WHITE
form of proxy against, and withhold
their votes from, all of the Kingsway resolutions, as applicable.
The reasons for this recommendation are set out in the management
information circular.
The Board urges Kobex Shareholders to review in
detail the Letter to Kobex Shareholders (reproduced below) and the
Company's management information circular, which is being mailed to
shareholders of record as of October 1,
2015. The management information circular has been filed on
SEDAR and will be available under the Company's profile at
www.sedar.com and on the Company's website at
www.kobex-capital.com.
Kobex Shareholders are urged to vote ONLY the
WHITE form of proxy or voting information form in favour of Kobex's
current Board well in advance of the proxy cut-off at noon (Toronto
Time) on Friday, November 13, 2015
pursuant to the instructions set out in the management information
circular.
D.F. King is
acting as Kobex's proxy solicitation agent in connection with the
Special Meeting. Kobex Shareholders who have any questions, require
information with regard to the Special Meeting or require any
assistance in executing and submitting their WHITE form of proxy or
voting instruction form can contact D.F.
King at:
North American Toll Free Number:
1-800-301-3998
Outside North America, Banks,
Brokers and Collect Calls: 1-201-806-7301
Email: inquiries@dfking.com
North American Toll Free Facsimile: 1-888-509-5907
Facsimile: 1-647-351-3176
The full text of the Letter to Kobex
Shareholders is as follows:
My Dear Fellow Shareholders:
YOUR company is under assault!
Kingsway Financial Services Inc.
("Kingsway"), a holding company for businesses selling car
insurance to risky drivers, which has spent its own way to
financial distress, is seeking to replace the board of directors
(the "Board") of Kobex Capital Corp. ("Kobex") and thereby
gain control of your company and its cash assets.
A meeting of the shareholders of Kobex has been
called for noon (Toronto time) on
Tuesday, November 17, 2015 (the "Meeting") in response to
the requisition of Kingsway (the "Requisition") to consider a
hostile dissident proposal from Kingsway
(the "Kingsway Proposal") to remove your current Board
and replace them entirely with five of Kingsway's nominees (the
"Kingsway Nominees"), or alternatively, to increase the Board's
size to nine and elect each of the five Kingsway Nominees. Either
way, Kingsway wants to take control over your company and your
investment.
You have a very clear choice to make at the
Meeting that will determine the value and security of your
investment in Kobex.
You can choose to stay the course with your
recently re‑elected and fully independent directors who have been
working to create and enhance long‑term shareholder value for all
Kobex shareholders
or
You can choose to believe the hollow and
misleading promises of Kingsway, with its history of shareholder
value destruction and related party transactions, and its
conflicted non‑independent Kingsway Nominees who have no identified
strategy for Kobex other than to spend your money to pay for
Kingsway's unnecessary proxy contest and to buy‑back Kobex shares
to increase Kingsway's proportionate interest.
WHAT YOU NEED TO KNOW ABOUT KINGSWAY
- Since Kingsway came under the effective control of Joseph Stilwell in 2009, Kingsway has lost a
staggering US$287,478,000 (annual
periods ending Dec. 31, 2010 —
Dec. 31, 2014).
- Kingsway's shares have lost ~77% of their value since
Stilwell achieved board representation.
- From 2009 to 2014, Kingsway's book value deteriorated from
US$348,073,000 (Dec 31, 2009) to US$41,866,000 (Dec 31,
2014) — that's US$306,207,000
in shareholder equity or 88% of the company GONE!
- During this time, the President and CEO of Kingsway appointed
by Stilwell, Larry Swets, has earned
over US$5,300,000 in direct
compensation.
- In its public disclosures, Kingsway has stated that it owed
approximately US$22,700,000 in
deferred interest payments prior to March 4,
2016 and that it at the time it did "....not have the cash
resources necessary to satisfy completely the deferred interest
payment obligations."
- In its public disclosures, Kingsway has stated that it has been
subject to intense review and supervision by insurance regulators
which have also requested additional capital contributions from
Kingsway to its insurance subsidiaries.
On all metrics the Kingsway management team has not delivered
and appears desperate for cash. Kobex Shareholders should not
trust these people, their non‑independent nominees or
their motives. Your investment depends on it!
A MIDNIGHT RAID
The Board believes that this proxy contest is simply a cash grab
aimed at promoting Kingsway's self‑interested agenda at the expense
of all other Kobex shareholders. A mere eight days after Kingsway
publicly announced the increase in its stake in Kobex from 3.62% to
13.07%, it launched the Requisition and proxy contest without any
attempt at approaching the Board or management of Kobex or engaging
in any discussions, either formally or informally. This is a
complete departure from Kingsway's own public statement made on
September 9, 2015 that it expected to seek to engage with
management and/or the Board in dialogue and actions related to
maximizing shareholder value and exploring strategic alternatives.
Now they claim an intention to pursue an agenda for the benefit of
all shareholders. We don't believe them and neither should
you.
Don't be fooled by their "concerned shareholder" charade. They
think their very recently acquired stake entitles them to complete
control over your company. Kingsway is only interested in getting
its hands on Kobex and your cash. As recently as in its 2014 10‑K
report filed with the U.S. Securities and Exchange Commission,
Kingsway stated that it did not have the cash resources necessary
to satisfy its interest payment obligations. Following the delivery
of the Requisition, Kingsway has been engaged in a creeping
acquisition of Kobex shares. If Kingsway wants to control your
cash, they should make a proper take‑over bid to all Kobex
shareholders at an appropriate premium price.
Your Board unanimously recommends that you submit the
enclosed WHITE form of proxy to send a message, loud and
clear, that you are against the Kingsway Proposal and that you
reject Kingsway's proposed changes to the Board.
WHO IS KINGSWAY?
The Board, in the exercise of its fiduciary duties, has carried
out an investigation of Kingsway based upon publicly available
information which is ongoing, and as a result of which it has
determined the following. Kingsway is a holding company for car
insurance businesses. In 2009, it came under the effective control
of funds managed by Joseph Stilwell.
When the Stilwell group arrived, the Kingsway share price was
$27.20 and it had a market
capitalization of $374,465,990.
Today, and notwithstanding a four‑for‑one share consolidation the
Kingsway share price is $6.15 and its
market capitalization is $133,344,614. In between these times, Kingsway
and its management have been unable to turn around its performance.
Kingsway management and its board have squandered approximately
US$320 million in the past five years. Kingsway has
approximately US$22.7 million in
imminent interest payments coming due. In light of its losses
incurred in recent years, by their own admission, Kingsway and its
regulated insurance subsidiaries have become subject to intense
review and supervision by insurance regulators.
In addition, Kingsway and its management have engaged in a
number of related party and other inappropriate transactions
against the interests of Kingsway shareholders. As an example,
Kingsway tried to dispose of the shares of a troubled subsidiary to
20 charities without disclosing to them the nature of the
toxic "gift" which almost immediately resulted in Kingsway being
sued by the Commonwealth of Pennsylvania Insurance Department. As
another example, the President and CEO of Kingsway sold an
insurance company to Kingsway for in excess of US$2,000,000, which company was subsequently
judged to be worthless. That same CEO currently enjoys the benefit
of the grant by Kingsway of restricted shares which in
10 years will result in his ownership of 10% of Kingsway. And
finally, as recently as March of 2015, Joseph Stilwell was sanctioned by an order of
the U.S. Securities and Exchange Commission for inappropriate
management of his investment funds. His funds are also being sued
by the former chairman of Kingsway who Mr. Stilwell himself
had appointed. Details of the foregoing as well as additional
cautionary information regarding Kingsway are provided under the
heading "Reasons for Rejecting Kingsway Resolutions".
Are these the people you want to control your investment?
NON‑INDEPENDENT NOMINEES WITHOUT KOBEX'S BEST INTERESTS IN
MIND
Kingsway claims that its Kingsway Nominees are independent. We
know otherwise. Of the five nominees, four are directly associated
with Kingsway. These four nominees are either members of the board
of Kingsway, members of the boards of affiliates of Kingsway or
service providers to Kingsway or its affiliates who have been or
may currently be beholden to Kingsway for their work and
compensation. Even before they have been elected, the Kingsway
Nominees have already expressly determined that they will follow
Kingsway's so‑called "plan". Their relationships and apparent bias
in favour of Kingsway should be of significant concern to all other
Kobex shareholders. If elected, whose interests do you think
they will serve — yours or Kingsway's?
THE WAY FORWARD
Do not be fooled. Kingsway's campaign is not about corporate
governance or about strategic vision. If Kingsway really cared
about the reduction of expenses, it would never have launched an
expensive proxy contest which virtually guarantees the unnecessary
expenditure of your cash. Kingsway has disclosed no specific plans
other than arranging to have Kobex pay for its expenses related to
this proxy contest and to have Kobex commence a share buyback
program to use your cash to effectively increase its proportionate
interest in Kobex. This at the very same time that Kingsway has
contrarily delivered a letter proposing to finance Kobex in another
endeavor to increase Kingsway's interest. We are, and you should
be, very suspicious that this very lack of an announced plan on
Kingsway's part demonstrates its designs on utilizing Kobex's cash
for its own purposes and to help alleviate its own serious
problems. Supporting Kingsway risks putting the fate and future of
Kobex in the hands of individuals with questionable motives. It
also risks disruption of your current Board's progress in the
reduction of expenses, the marshalling and conservation of Kobex's
cash reserves and the consideration of appropriate transactions to
unlock value for all Kobex shareholders. In the midst of the
current challenging global economic situation and depressed
commodity price environment, with the attractive opportunities that
this implies, Kobex's cash reserves represent a precious asset that
cannot be replicated and should not be squandered.
THE BOARD'S RECOMMENDATION
As you prepare to cast your vote, the Board asks you to consider
the very real concerns regarding Kingsway and the Kingsway Nominees
identified in this letter and further described in the accompanying
management information circular including, among others, Kingsway's
and its management's past history and performance as well as the
non‑independence of, and irreconcilable conflicts of interest
facing, the Kingsway Nominees should they be elected to your Board.
I would ask you to read the circular carefully as it provides
compelling and essential information regarding the challenge facing
your company today.
Do not turn Kobex over to Kingsway and its handpicked
Kingsway nominees. We urge you to stop Kingsway in its hostile and
self‑serving attempt to take control of Kobex and your assets
and investment.
The Board unanimously recommends that you vote the WHITE
form of proxy AGAINST and WITHHOLD your votes from the
Kingsway resolutions, as applicable.
Regardless of the number of shares you own, you should take
immediate action and cast your vote today by completing and
returning only the WHITE form of proxy.
If you have any questions or need assistance in casting your
vote or completing the WHITE form of proxy, please call D.F.
King & Co., Inc. at toll‑free 1‑800‑301‑3998 and
they will be happy to help. Additionally, for up to date
information and ease of voting we strongly encourage shareholders
to please continue to visit www.kobex‑capital.com.
Regards,
Paul van Eeden
Chairman
Forward-Looking Statements
Certain statements contained in this news release may
constitute forward-looking statements which involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. The use of
any of the words "anticipate", "continue", "expect", "may", "will",
"would", "project", "should", "believe", "plan" and "intends" and
similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
these identifying words. Forward-looking statements may relate to
Kobex's management's expectations, estimates and analysis with
respect to: its business strategy; the composition of its board of
directors; and the feasibility, value and impact of Kingsway's
proposals and strategies for Kobex and the Board's belief that
these proposals and strategies are not in the best interests of
Kobex or its shareholders, and will destroy shareholder
value.
Forward-looking statements are based on certain factors and
assumptions regarding, among other things, market acceptance of
Kobex's corporate strategy and corporate endeavours and the success
of Kobex's announced corporate strategy and future transactions.
There can be no assurance that these assumptions will prove to be
correct. Readers are cautioned that forward-looking statements
included in this news release are not guarantees of future
performance, and are also cautioned not to place undue reliance on
forward-looking statements which involve known and unknown material
risks and uncertainties that may cause our actual results,
performance or achievements to be materially different from any
anticipated results, performance or achievements expressed or
implied in such forward-looking statements. These statements speak
only as of the date of this news release. Kobex undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be expressly required by applicable
securities law.
All of the forward-looking statements made in this news
release are qualified by these cautionary statements and other
cautionary statements or factors contained herein, and there can be
no assurance that the actual results or developments will be
realized or, even if substantially realized, that they will have
the expected consequences to, or effects on, Kobex.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this news release.
SOURCE Kobex Capital Corp.