- Premium tender offer of $1.20 per
common share in cash for up to 10,000,000 common shares
(representing a significant premium of approximately 22% to the
closing price of the Company's common shares on the TSXV on
March 20, 2023, and a 23% premium to
the volume-weighted average price of the Company shares on the TSXV
for the thirty (30) trading days preceding the announcement of the
Tender Offer)
- Pelham LP's tender offer provides shareholders with liquidity
in a stock with limited trading volume and a pattern of poor
corporate governance
- Pelham LP hopes to work with management to ensure effective
independent oversight and align compensation with the Company's
needs and industry standards
- Shareholders who have questions with respect to the tender
offer should contact Laurel Hill Advisory Group at 1-877-452-7184
or by email at assistance@laurelhill.com and tender offer materials
are available at www.nickel28offer.com
TORONTO, March 21,
2023 /CNW/ - Pelham Investment Partners LP
("Pelham LP"), a value-oriented long-term investor in Nickel
28 Capital Corp. (formerly Conic Metals Corp.) (TSXV: NKL)
("Nickel 28" or the "Company"), today announced an
offer to acquire up to 10,000,000 common shares in the capital of
the Company (the "Tender Offer"), at a price of $1.20 per common share, payable in cash
(the "Tender Price"). The Tender Price represents
a significant premium of approximately 22% to the closing price of
the Company's common shares on the TSXV on March 20, 2023, being the previous trading day to
the date of announcement of the Tender Offer and a 23% premium to
the volume-weighted average price of the Company shares for the
thirty trading days preceding the announcement of the Tender Offer.
The Tender Offer is not a "take-over bid" under Canadian securities
laws.
The Pelham LP Tender Offer
The Tender Offer is open for acceptance by shareholders of the
Company until 5:00 p.m. (Eastern
Time) on April 25, 2023 (the
"Expiry Time"), unless the Tender Offer is extended, varied
or withdrawn. If the Tender Offer is withdrawn, Pelham LP shall
cause all common shares delivered pursuant to the Tender Offer to
be returned to shareholders. The Tender Offer is not subject to any
financing condition, and Pelham LP confirms that it has sufficient
cash resources to pay for all common shares subject to the Tender
Offer.
If more than the maximum number of common shares for which the
Tender Offer is made are delivered in accordance with the Tender
Offer and not withdrawn at the time of take up of the common
shares, the common shares to be purchased from each depositing
shareholder will be determined on a pro rata basis according
to the number of common shares delivered by each shareholder,
disregarding fractions, by rounding down to the nearest whole
number of common shares.
The complete terms and conditions of the Tender Offer are set
out in an offer letter to shareholders, which has been publicly
disclosed by way of a separate press release, as well as a form of
letter of transmittal (the "Letter of Transmittal" and
together with the offer letter to shareholders, the "Offer
Documents") to be used to accept the Tender Offer. The Tender
Offer is subject to certain conditions as set out in the Offer
Documents which, unless waived, must be satisfied. In particular,
the Offer Documents provide that if, prior to the date that the
transfer of common shares that are taken up and paid for by Pelham
LP has been completed, the Company fixes a record date for a
meeting of shareholders, each depositing shareholder whose common
shares are taken up and paid for will appoint representatives of
Pelham LP as its nominees and proxy for such meeting. Pelham LP is
relying on the exemption under section 9.2(4) of National
Instrument 51-102 – Continuous Disclosure Obligations to
the circular requirements of applicable Canadian proxy
solicitation laws. For further details, please see below under the
heading "Additional Information".
The Tender Offer is not a formal or exempt take-over bid under
Canadian securities laws and regulations. Full details of the
Tender Offer are included in the Offer Documents and are available
online on the Company's SEDAR profile at www.sedar.com and
will also be available online at www.nickel28offer.com.
Reasons to Accept Pelham LP's Tender
Offer:
- All-Cash Premium. Shareholders will receive liquidity at
a significant premium to the current trading price of the shares
(approximately a 22% premium to the closing price of the Company's
common shares on the TSXV on March 20,
2023, being the previous trading day to the date of
announcement of the Tender Offer, and approximately a 23% premium
to the volume-weighted average price of the Company shares on the
TSXV for the thirty (30) trading days preceding the announcement of
the Tender Offer);
- Management Lacks Independent Oversight. The Company's
management team lacks adequate independent oversight, which Pelham
LP believes has contributed to excessive executive compensation. If
left unchecked, Pelham LP believes that such excessive compensation
will materially and continuously dilute shareholders' ownership in,
and reduce the value of, their investment in the Company;
- Limited Liquidity. Pelham LP believes that another
liquidity event for shareholders is unlikely – management's ongoing
receipt of excessive compensation dis-incentivizes them from
pursuing a sale even if it is in the best interests of all
shareholders;
- Shareholders Need a Voice. Pelham LP believes that,
in the absence of a motivated large shareholder, it seems unlikely
that the Company's governance will improve and, over time,
management's ownership of the Company will continue to creep.
Pelham LP is prepared to take an active role in ensuring the future
success of the Company, for the benefit of all shareholders.
Background to the Tender Offer and Pelham LP's Significant
Corporate Governance Concerns at Nickel 28:
Pelham LP is making the Tender Offer to all shareholders of the
Company following a recent unsuccessful attempt at constructive
engagement with management of the Company. As alluded to in the
Company's extremely defensive news release dated February 8, 2023, Pelham LP is the shareholder
that management recently complained about as making a
"self-serving" and "coercive" proposal. Pelham LP is disappointed
that management has chosen to misrepresent to shareholders both the
substance and intent of its proposal, leaving out material facts in
favour of disparaging commentary.
In actual fact, Pelham LP (who is a long-term shareholder of the
Company and who believes in its long-term potential), proposed a
US$15 million investment in common
shares of the Company at a 15% premium to the share price. We
believed this injection of capital would allow the Company to
accelerate its business plans for the benefit of all shareholders,
including by accelerating the repayment of non–recourse debt in a
manner that would accelerate the receipt of increased cash flow
owed to the Company upon the full repayment of that debt (which
management, as recently as January 30,
2023, disclosed as being an objective of the Company).
We also expressed our disappointment and frustration with
management regarding a lack of independent oversight and what we
view as excessive executive compensation. We pointed out the
glaring fact that there were only two independent directors on the
board when the Company's board mandate requires at least three
independent directors. As well, we noted that both of the
"independent" directors, Mr. Philip
Williams and Mr. Maurice
Swan, have overlapping board positions with the
non-independent directors, Messrs. Milewski and Cochrane, raising legitimate concerns about
actual or perceived conflicts of interest. The relationships among
the Company's board members are ones which breed co-dependence, not
independence and, as a result, Pelham LP believes that the board of
directors cannot be relied upon to act in the Company's best
interests.
These issues are no accident – the composition of the board at
the time of our proposal was exactly as nominated by management at
the Company's most recent annual general meeting. The fact that
management hastily appointed a third "independent" director only
after we pointed out these failures does nothing to alleviate our
concern. In fact, the new "independent" director appears to have no
public company directorship experience at all, and we question why
he was selected and what selection processes were undertaken.
The Company is at the threshold of significant cash flow without
appropriate independent oversight of management. Considering also
the extremely generous and dilutive equity-based compensation
awards that the board of directors has granted in recent years
leaves us, as long-time and long-term focused shareholders, deeply
concerned about the effectiveness of the Company's corporate
governance.
Accordingly, we explained that, if the board were open to our
investment proposal, we would expect customary investor protection
rights, as well as the right to appoint two independent nominees to
the board of directors, to be effective on closing. Contrary to the
Company's grossly misleading statements in its February 8th news release, we were not
seeking a wholesale "reconstitution" of the board. We also
indicated that we would agree to reasonable standstill provisions
on closing in order to provide the management team with the
stability it would need to work productively and constructively,
and that we would expect the compensation committee to retain an
independent compensation consultant to help align executive
compensation with industry standards.
As we conveyed to management, we are believers in the Company's
long-term success, and we are willing to take a more active role as
an investor. Management's response to our engagement, however, has
been to misrepresent our good-faith outreach and quickly retain a
coterie of expensive advisors to aid them in defending themselves
against their own long-standing shareholders.
We note that management makes much of its position as the
largest shareholding group in the Company, going so far as to claim
that its ownership stake assures that it will act in all
shareholders' best interests. However, these statements
routinely ignore the fact that the vast majority of management's
ownership has come at the direct expense of shareholders. We point
out that, according to publicly available information, it appears
that less than one sixth of management's self-described
greater than 25% interest in the Company represents open market
purchase of shares at fair value; the vast majority of the balance
relates to stock grants for which management paid nothing,
and change of control payments paid out by Nickel 28's predecessor
(despite the fact that management continued in their executive
roles with Nickel 28). We further note that the alignment
management is supposed to have with other shareholders due to its
large holdings in the Company didn't stop the board from approving
yet another large stock grant several weeks ago – this one equal to
more than 5% of the Company's then issued and outstanding
stock. Lest it be forgotten, we note all of this is occurring
at a company which, by dint of its lack of directly owned operating
assets, requires very little in the way of actual day-to-day
operations.
We believe that the Company's management team is not acting in
the best interests of the Company. When faced with legitimate
concerns regarding executive compensation and independence, instead
of welcoming shareholder engagement, they have chosen to turtle
themselves under expensive financial, legal and proxy advisors
whose fees will inevitably become yet another burden for the
Company's shareholders to bear. We are committed to our investment,
and to the long-term success of the Company. We stand ready to
engage with management constructively and call on them to do
so.
Pelham LP's Advisors
Pelham LP has engaged Gowling WLG (Canada) LLP and Norton Rose Fulbright Canada
LLP as legal advisors and Laurel Hill Advisory Group as depositary
and information agent.
About Pelham LP
Pelham Investment Partners is a New
York based investment partnership. The firm is a
value-oriented and long-term investor. Pelham Investment
Partners was founded in 2021 by Ned
Collery. Prior to founding Pelham Investment Partners,
Ned Collery was a partner at SC
Fundamental and, prior to that, an analyst at Arbiter Partners.
Shareholder Questions
Shareholders who have questions with respect to the Tender
Offer, or who need assistance in depositing your common shares,
please contact the depositary and information agent for the Tender
Offer:
Laurel Hill Advisory Group
North America Toll Free:
1-877-452-7184
Calls outside North America:
1-416-304-0211
Email: assistance@laurelhill.com
Additional Information
Pelham LP is relying on the exemption under section 9.2(4) of
National Instrument 51-102 – Continuous Disclosure
Obligations to make this public broadcast solicitation. The
following information is provided in accordance with corporate and
securities laws applicable to public broadcast solicitations.
This solicitation is being made by Pelham LP, and not by or on
behalf of management of Nickel 28. Laurel Hill Advisory Group will
receive a fee of $87,500 for its
services as Depositary and Information Agent under the Tender Offer
plus ancillary payments and disbursements. Based upon publicly
available information, Nickel 28's registered office is located at
666 Burrard Street, Suite 2500, Vancouver, BC V6C 2X8, Canada and its head office is located at 155
University Ave., Suite 1240, Toronto,
Ontario M5H 3B7, Canada.
Pelham LP is soliciting 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 press release, speech or
publication, and by any other manner permitted under applicable
Canadian securities laws. In addition, this solicitation may be
made by mail, telephone, facsimile, email or other electronic means
as well as by newspaper or other media advertising and in person by
representatives of Pelham LP. All costs incurred for such
solicitation will be borne by Pelham LP.
A registered shareholder who has given a proxy under the terms
of the Letter of Transmittal may, prior to its common shares being
taken up and paid for under the Tender Offer, revoke the proxy by
instrument in writing, including a proxy bearing a later date. The
instrument revoking the proxy must be deposited at the registered
office of Nickel 28 at any time up to and including the last
business day preceding the date of the meeting or an adjournment or
postponement thereof, or with the Chair of the meeting on the day
of the meeting, or in any other manner permitted by law, provided
that, in each circumstance, a copy of such revocation has been
delivered to Laurel Hill Advisory Group, as Depositary and
Information Agent, at its principal office in Toronto, Ontario, Canada prior to the common
shares relating to such proxy having been taken up and paid for
under the Tender Offer. A non-registered shareholder may revoke a
form of proxy or voting instruction form given to an intermediary
at any time by written notice to the intermediary in accordance
with the instructions given to the non-registered shareholder by
its intermediary. Non-registered shareholders should contact their
broker for assistance in ensuring that forms of proxies or voting
instructions previously given to an intermediary are properly
revoked. None of Pelham LP nor, to its knowledge, any of its
associates or affiliates, has any material interest, direct or
indirect, in any transaction since the commencement of Nickel 28's
most recently completed financial year, or in any proposed
transaction which has materially affected or will materially affect
Nickel 28 or any of its subsidiaries. None of Pelham LP nor, to its
knowledge, any of its associates or affiliates, has any material
interest, direct or indirect, by way of beneficial ownership of
securities or otherwise, in any matter to be acted upon at any
upcoming shareholders' meeting, other than as set out herein.
Cautionary Statement Regarding
Forward-Looking Information
Certain statements contained in this press release, including
without limitation statements regarding taking up and paying for
common shares deposited under the Tender Offer, Pelham LP's
assessment of the consequences of what it believes to be governance
failings at the Company, as well as Pelham LP's assessment of the
Company's future cash-flow prospects, contain "forward-looking
information" and are prospective in nature. Statements containing
forward-looking information are not based on historical facts, but
rather on current expectations and projections about future events,
and are therefore subject to risks and uncertainties that could
cause actual results to differ materially from the future outcomes
expressed or implied by the statements containing forward-looking
information. Often, but not always, statements containing
forward-looking information can be identified by the use of
forward-looking words such as "plans", "expects", "intends",
"anticipates", or variations of such words and phrases or
statements that certain actions, events or results "may", "could",
"should", "would", "might", or "will" be taken, occur or be
achieved. Although Pelham LP believes that the expectations
reflected in statements containing forward-looking information
herein made by it (and not, for greater certainty, any
forward-looking statements attributable to the Company) are
reasonable, such statements involve risks and uncertainties, and
undue reliance should not be placed on such statements. Material
factors or assumptions that were applied in formulating the
forward-looking information contained herein include the assumption
that the business and economic conditions affecting the Company's
operations will continue substantially in the current state,
including, without limitation, with respect to industry conditions,
general levels of economic activity, continuity and availability of
personnel, local and international laws and regulations, foreign
currency exchange rates and interest rates, inflation, taxes, that
there will be no unplanned material changes to the Company's
operations, and that the Company's public disclosure record is
accurate in all material respects and is not misleading (including
by omission). Pelham LP cautions that the foregoing list of
material factors and assumptions is not exhaustive. Many of these
assumptions are based on factors and events that are not within the
control of Pelham LP and there is no assurance that they will prove
correct. Important facts that could cause outcomes to differ
materially from those expressed or implied by such forward-looking
information include, among other things, actions taken by the
Company in respect of the Tender Offer, the content of subsequent
public disclosures by the Company, the failure to satisfy the
conditions to the Tender Offer, general economic conditions,
legislative or regulatory changes and changes in capital or
securities markets. These are not necessarily all of the important
factors that could cause actual results to differ materially from
those expressed in any of Pelham LP's forward-looking information.
Other unknown and unpredictable factors could also impact outcomes.
Statements containing forward-looking information in this press
release are based on Pelham LP's beliefs and opinions at the time
the statements are made, and there should be no expectation that
such forward-looking information will be updated or supplemented as
a result of new information, estimates or opinions, future events
or results or otherwise, and Pelham LP disclaims any obligation to
do so, except as required by applicable law.
SOURCE Pelham