KEWL Keweenaw Land Association Limited (PK)

The following is a letter from Ron Gutstein & Scott Frisoli to shareholders of Keweenaw Land Associated, Limited (Other OTC: KEWL):

Dear Shareholder:

By now you have received proxy statements from both management and us. You have probably also received a rather lengthy letter from management that instead of discussing the issues, consists largely of ad hominem attacks. We were both surprised and disappointed by the tone of managements� letter. Instead of using shareholder funds to produce and distribute a letter that engages in a meaningful and intelligent discussion of the issues, they used our money to attack those of us that are trying to help increase shareholder value, and openly discuss the issues that face our company. As demonstrated in the last two proxies that we distributed, the ongoing �green revolution� gives our company the opportunity to expand into new and exciting areas, while MAINTAINING the long-standing tradition of respect for the environment.

As a result of managements� unfortunate letter to shareholders, we were forced to change the communication that we were about to distribute. Instead of going more in depth into our proposals, we are forced to respond to management�s accusations.

Over the past two years, we have made the conflicts that exist a major issue. Management claims that our allegations are �factually incorrect and distorted� yet they never state how or why. We call on management to tell us how any of the following statements are distortions or factually incorrect:

• Mr. Ayer and Mr. Totten failed to disclose that they are related to one another, and have major interests in Essex Street Associates.
• Essex Street Associates invests in the funds managed by another board member, and failed to disclose this investment until asked at the 2008 shareholder meeting.
• We believe that Essex Street Associates, which according to last year�s proxy information Mr. Ayer is the managing member of, controls approximately 180,000 shares of stock. That position would constitute almost 28% of the outstanding shares of our company. If our belief is not accurate, why don�t they just say tell us. By refusing to discuss Essex Street�s overall position in our company, we are forced to believe that our conclusions are correct. Essex Street�s overall percentage of ownership is VERY important in light of our bylaw proposals, and will be discussed further.
• Mr. Ayer and Mr. Totten comprise two of the three seats on the board nominating committee. This makes it clear to other board members that they need the approval of Essex Street Associates in order to keep their lucrative jobs.

Management tried to accuse us of having a conflict as a result of our role as a market maker in the company�s stock. We note that unlike management, we disclosed this issue in the very first press release that we issued when initiating this process back in March of 2008. Furthermore, we also stated that if this situation were deemed a conflict, we would stop trading the stock. Management is trying to create an issue out of a situation that we disclosed, and had already accounted for. We further note that management claims that Mr. Gutstein has no executive experience in managing a business. As stated in proxies for the last two years, Mr. Gutstein was the Director of Trading Operations for Investc Ernst. In this capacity he had both regulatory and business responsibility for over 75 traders and support staff. He further oversaw the development and implementation of new trading businesses and integration of acquired businesses. His division had annual revenue in excess of 20 million dollars. That is twice the size of our company�s 2007 gross receipts. We ask why management intentionally misstated his professional background?

The only direct discussion of our proposals in their letter occurs when management describes them as �financial engineering� and �questionable projects.� We are once again forced to ask management for reasons. We would like to debate the merits of the proposals, not exchange rhetoric.

1. Current Dividend Policy- although management states that they review the policy every year, we still have not been given a response to the concerns. The current dividend offers a lower yield then US government bonds without the same capital protection. We note that the twelve-month high trade in our company occurred June 17, 2008. The trade was at 289 a share. That trade took place the day BEFORE management announced the results of last years contest. The low transaction took place on March 25, 2009 at 120. This represents almost a 59% DROP in value. Furthermore, last year one of management�s arguments against REIT conversion was that it would prevent growth out of earnings. We would like to see the earnings reinvested in the company and not used for a token dividend. We call on management to explain their rational.
2. Explore Wind Power Generation- it is interesting to note that management makes absolutely NO response to this opportunity. We believe that this initiative is both revolutionary, and in keeping with our company�s long-standing tradition of respecting the environment and harvesting its potential. We note that on April 22, 2009 the New York Power Authority issued a RFEI to seek bidders to build a major wind power generation facility on their portion of the Great Lakes. Clearly one of the largest power companies in the country see the potential, why shouldn�t our board. Any interested shareholder can see the NYPA announcement at: http://www.nypa.gov/press/2009/090422a.htm
3. Initiate a stock buyback- we once again ask management to discuss their opposition to buying back the shares in our company when it becomes undervalued? At a price of 200/share, at MOST our company�s land is being valued at 800/acre. Why is the board taking on debt to pay others in excess of 1100/acre when we can buy our own land at a significant discount? Buying our own stock below value would increase the value of every other share that is outstanding. We note that Plum Creek has used the recent market turmoil to repurchase almost 7% of their outstanding stock since September of 2007. We ask management to explain their thoughts on the issue
4. Extracting value from mineral rights- Management offers no discussion on this opportunity. We once again believe that this option offers our shareholders the possibility to get value for the company�s assets without giving up control of them.
5. Investigate opening an ATV/Snowmobile park- Management offers no discussion on this opportunity. We again note that this idea was not original. As members of the securities industry, we are exposed to literally hundreds of different companies on a regular basis. This depth of knowledge enables us to bring ideas that are generated elsewhere to Keweenaw so that our shareholders can benefit as well. At a time when the state of Michigan is leading the country in unemployment and dislocation, we offer an idea that would help create jobs and drive tourism to a depressed area of the country. We believe that this is also in keeping with our company�s long standing tradition of being a driver of economic development for the areas in which we operate.
6. Board Conflicts- As we discussed earlier, management never tells us how our statements were inaccurate. Instead they try and attack our qualifications. Their biggest point of contention is that we have no timber experience. We ask management what timber experience Mr. Totten had prior to his relative appointing him to the board. Furthermore, we remind our fellow long time shareholders that in 2005, our board appointed, and then in 2006 nominated Ms. Kimberly Borans to our board. The 2006 proxy statement describes Ms. Borans as a 32-year-old Operations Manager for Essex Street Associates. We ask in light of the board�s obvious issues with our qualifications, other than being an employee of Essex Street Associates, how was Ms. Borans qualified to sit on the board, or was the board negligent in their fiduciary responsibilities to ALL shareholders by appointing and then nominating her.
7. Raising Capital to Purchase Large Additional Land- we can only assume that management did not understand this proposal. We are simply stating that Keweenaw should form a management company as a subsidiary that would seek to manage limited partnerships that would buy land in the area. Keweenaw would then earn a fee for managing the land. We are not advocating issuing additional stock, we are advocating leveraging our existing management team to increase our company�s profile and earning potential.
8. REIT Formation- Management correctly notes that we did not include this proposal in our list of top issues. As noted the TREE Act of 2008 made this issue less pressing. We do believe that this issue will resurface as the TREE Act needs to be re-authorized. As seen by Mr. Ayer�s own statements, Keweenaw does not really know what is involved in the conversion process. In his report to shareholders last year, Mr. Ayer stated that conversion would cost approximately twelve million, yet 4 weeks later, in his presentation to ISS, Mr. Ayer states the conversion would cost the company in excess of 18 million. We doubt that the cost of conversion increased 50% in the intervening 6 weeks. We would rather believe that the company is not really sure of the cost, than belief that Mr. Ayer was trying to scare people with a radically inflated cost estimate.

Management concludes their attacks by stating that we do �not believe in the current strategic vision of the company,� in that statement we agree. Our slate believes that the assets at hand are being under utilized and potential opportunities are being ignored. We need to change the stagnant vision of being a company that cuts trees and sells logs, to one of a dynamic progressive environmentally friendly force. We ask our fellow shareholders to look at the facts and ignore the rhetoric. Our slate has consistently proposed strong ideas and new approaches to increasing shareholder value while maintaining the traditions that have been long established. We further ask our co-owners to look at our bylaw proposals in light of the ownership position that we believe exists at Essex Street.

Proposal 2 and Proposal 4 - in these proposals we are seeking to change the current bylaws to allow a majority vote for changes to bylaws and to repeal Article X. Management is trying to paint these bylaw provisions as a protection for shareholders without having really described what they are protecting us from. Rather it is our belief that these provisions were specifically designed to help Essex Street Associates consolidate and maintain control of the company without having bought a majority of it.

• In their opposition, management states that someone tried to �steal� the company in 1998. The very fact that their efforts were unsuccessful shows that there is NO need for a supermajority. If a majority of shareholders agree to either a transaction or a bylaw change, why should a minority holder be able to prevent a change? It is in this context that we once again ask Mr. Ayer and Mr. Totten to reveal the full holdings of Essex Street Associates, including the Ayer Family Timber Trust that according to court papers Rosa Ayer is the trustee of.
• Management tells us that shareholders approved these changes in 1999. However, we are left wondering that had shareholder been aware of the position that we believe is held by Essex Street, would they have approved the changes? We further ask that if we are correct in our belief, and if other board members knew of the position, did they violate their fiduciary responsibility to other holders by not disclosing this conflict? We doubt that the shareholder base would have granted a minority holder veto power over all major corporate decisions.
• Our board argues that they can set aside the provisions if they 75% of the board votes in favor of a transaction. However, we once again note that since two of the six members of the board are part of Essex Street Associates, a relationship that they failed to disclose, this provision will NEVER be set aside unless Essex Street agrees. Therefore a single group has been given veto power over the future of our company.
• In a country that is founded on the fundamental belief in democracy, why should we allow a minority holder the ability to deny the will of the shareholders? Our board cannot justify granting a group veto power without having disclosed the full implications of their proposals. If we are correct in our conclusions as to ownership positions, we believe that by not disclosing all of the available information, our board did not meet its fiduciary obligations.

WE ASK ALL SHAREHOLDERS TO VOTE FOR PROPOSALS 2 AND 4

Proposal 3- Registration with the SEC- This proposal would require our company to meet Federal requirements with respect to securities law. As shareholders we would benefit from increased financial information, we would have a better picture of ownership, more confidence in management statements, and increased exposure to the investment community.

• Federal Securities law requires a company to register with the SEC when they reach 500 registered shareholders. Keweenaw relies on a loophole to get a round this requirement. Counting both shareholders that are registered on its books, and those that hold stock in �street name� our company has approximately 850 holders. We believe that Keweenaw should lead by example and not rely on loopholes to avoid taking the ethically correct action.
• We do agree that registration carries a price, however, a mere 0.30- 0.40-cent increase in the market price of our stock would offset any cost to the company. As stated in our proxy, many potential investors in our company (pension funds, trusts, and endowments) are barred by charter from investing in unregistered companies, once registered, these investors can look at our company.
• We ask our fellow shareholders to look at the example of St. Joe Paper (JOE). For years the company traded by appointment in the pink sheets. After several outside holders spoke up and demanded registration, the company split its stock, registered with the SEC, and went listed on the NYSE. The following years proved to be the greatest rise in shareholder value than had ever been seen before. This rise in shareholder value was a direct result of St. Joe�s registration and exposure to a wider investor base. Although this is just one example, there are many others. We are confident that the increase in expense will be viewed as an investment in the company�s future.
• In light of our concerns about disclosure and conflicts we believe that this is a price worth paying and a risk worth taking

WE URGE ALL SHAREHOLDERS TO VOTE IN FAVOR OF PROPOSAL 3

In conclusion, we want all owners to have a voice and be heard. We seek to bring fresh ideas to our company, and reinvigorate a board that has an average length of service in excess of 16 years. We ask for you to ignore rhetoric and focus on facts. We ask that you vote the WHITE proxy card. As the New York Times� article stated on May 23, 2009 �Elect a Dissident, and you may win a prize�

Sincerely,

Ron Gutstein & Scott Frisoli

If you have questions or need assistance in voting your shares, please call:

THE ALTMAN GROUP, INC.

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LYNDHURST, NJ 07071

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Keweenaw Land Association (PK) (USOTC:KEWL)
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부터 2월(2) 2025 으로 3월(3) 2025

Keweenaw Land Association (PK) (USOTC:KEWL)
과거 데이터 주식 차트
부터 3월(3) 2024 으로 3월(3) 2025