Genesis Board Finally Comes Clean About Their Massive Waste of Shareholder Assets

TORONTO, Aug. 13, 2013 /CNW/ - The chair of the special committee of Genesis's (TSX: GDC) board has sent another "letter to shareholders" defending their belief that they should defy the wishes of an overwhelming number of shareholders that want them replaced.

The board for the first time discloses that they have wasted "well over $2 million" of shareholder money on their desperate attempt to stay in control - an extraordinary and unbelievable sum. How much more are they willing to throw away?

Entrenched Directors Offer to Resign - Why Haven't They?

The chair of the special committee indicates that three of the four entrenched directors have offered to resign if Smoothwater can find more qualified candidates - which we have done.  If their offer is valid, we demand they stop wasting shareholder money and resign immediately.  The shareholders have decided - as they have every right to do - that these directors should be replaced immediately. Why keep delaying the annual meeting when they could resign today?

Current Board Is Ignoring Shareholders' Democratic Right to Elect New Directors

This board has consistently ignored and thwarted the fundamental principle that it is the shareholders who elect the directors, not the incumbent board.  They seem to disagree with a large shareholder exercising its legitimate right to propose an alternative board, and are spending large sums of shareholder money in an attempt to disallow most shareholders from voting their shares.

As of today, an overwhelming number of shareholders have voted the BLUE proxy endorsing Smoothwater's director nominees.  The unelected incumbents should resign as they have promised, and not waste more shareholder money.

The Board Did Not "Compromise"

The entrenched directors now claim that they "compromised" and added a number of directors to appease Smoothwater.  This is false.

The only person associated with Smoothwater on the incumbent slate is Stephen Griggs, CEO of Smoothwater. Iain Stewart was recommended to the board by a current board member, and not by Smoothwater, and is in no way associated with Smoothwater.  All of the directors nominated by Smoothwater are "independent" as defined by Canadian securities laws.  In fact, in Canada, there is a strong preference for directors to be major shareholders - to have "skin in the game"- and directors like the incumbents who own none or few shares are considered inappropriate directors by leading corporate governance experts.

No Strategy Seems to Exist

They admitted to shareholders yesterday that there is no corporate strategy or business plan in place for Genesis even though the current board has had a full year to develop one and present it to shareholders.  The stock price has reflected this lack of focus by the board. The nominees put forward on the BLUE proxy will bring that focus to the board of Genesis.

Now is the Time to Rebuild Genesis

Smoothwater believes that now is the time for the board changes needed to rebuild Genesis on behalf of all shareholders. We urge all shareholders to vote the BLUE proxy for the nominees of Smoothwater.  These nominees are independent, skilled and experienced.

If you have already voted using the white proxy, you can still change your vote by submitting a BLUE proxy or Voting Instruction Form, which will revoke any previously submitted proxy or Voting Instruction Form.

To rebuild Genesis vote your BLUE proxy: Shareholders are urged to vote before the deadline of Friday, August 16, 2013 at 8:00 a.m. (Toronto Time).

If you have any questions or need assistance in voting your BLUE proxy or BLUE Voting Instruction Form, please call Kingsdale Shareholder Services Inc. at 1-888-518-1558 (toll free within North America) or 416-867-2272 (collect calls accepted), or by email at [email protected].

SOURCE: Smoothwater Capital Corporation

Stephen J. Griggs
Chief Executive Officer
Smoothwater Capital Corporation
2500 - 120 Adelaide Street West
Toronto ON M5H 1T1
416.644.6582
[email protected]
www.smoothwatercapital.com