Mithaq Announces Nominees for Election to the Board of Directors of Aimia
TORONTO, May 30, 2024 /CNW/ - Mithaq Capital SPC ("Mithaq"), the largest shareholder of Aimia Inc. (TSX: AIM) ("Aimia"), today announced its slate of six directors for election to Aimia's board of directors (the "Board") at the annual meeting of shareholders to be held on June 26, 2024 (the "Meeting"). Mithaq is taking action because of its ongoing concerns with the strategic direction and corporate governance practices of Aimia's leadership, which continues to engage in entrenching, self-interested behaviour and the pursuit of a strategy that has caused significant destruction of shareholder value.
Mithaq has ownership of, or control or direction over, a total of 26,893,588 common shares of Aimia, representing approximately 26.98% of the issued and outstanding common shares.
Mithaq's nominees, which were submitted prior to the close of business today to the Corporate Secretary of Aimia in accordance with its advance notice by-law (by-law no. 2013-1), are: Turki Saleh A. AlRajhi, Muhammad Asif Seemab, Tariq Hamoodi, Max Volsky, Sharon Stern and Naveed Kamran (collectively, the "Mithaq Nominees").
Together, the Mithaq Nominees have the experience and skills required to correct the poor track record of Aimia's current leadership, including:
- very disappointing performance, with Aimia's share price declining approximately 28% over the last twelve months, 40% over the last two years and 45% over the last three years to $2.68 per share as of the close of markets on May 29, 2024;
- depriving shareholders of Mithaq's all-cash premium bid of $3.66 per common share made in October 2023 by recommending that shareholders reject it on the basis that it undervalued Aimia, a price that now represents a premium of approximately 37% above the closing price per share on May 29, 2024, and by taking self-serving actions to defeat the bid;
- engaging in egregious private share issuances, including:
- to Board-friendly investors in October 2023 at a price of $3.10 per share, representing a discount of approximately 58% to reported net asset value ("NAV") per share at the time, resulting in the issuance of a total of 10,475,000 common shares (10.51% of the issued and outstanding common shares) and 10,475,000 common share purchase warrants with an exercise price of $3.70; and
- to Paladin Private Equity, LLC ("Paladin"), a related party of Aimia, in May 2024 at a price of $2.50 per share, representing a discount of approximately 57% to reported NAV at the time and being only 6% above the three-year trading low, resulting in the issuance of a total of 5,040,000 common shares (5.06% of the issued and outstanding common shares);
- drastically overpaying to terminate certain carried interest arrangements with Paladin, a related party of Aimia, that were primarily based on future performance that has not been achieved;
- misaligned and value-destructive investment strategy, including with respect to the pursuit of overpriced acquisitions of Cortland International and Bozzetto Group (as well as other acquisitions Aimia has indicated it is considering), despite Aimia's previously announced intention to pursue acquisitions in cash-generative businesses in either the U.S. or Canada;
- continued erosion of shareholder value through the operation of a needlessly expensive and unsustainable head office structure;
- misguided focus on private equity transactions rather than seeking opportunities in the public markets;
- low equity ownership by the Board, resulting in a misalignment with the interests of shareholders;
- ineffective executive compensation program, which lacks tangible and/or calculable performance-based key performance indicators; and
- a history of concerning disclosure and corporate governance practices, including most recently:
- failing to timely disclose the departure from the Board of Karen Basian, lead independent director and chair of the audit committee, other than by removing her profile from Aimia's website;
- refusing to provide adequate disclosure to shareholders of the process undertaken by the Board and any special committee in negotiating the termination of Aimia's agreements with Paladin, a related party of Aimia;
- unnecessarily delaying the calling of Aimia's 2024 annual shareholder meeting such that the record date fell after the issuance of shares of 5,040,000 common shares to Paladin, presumably with the objective of increasing the board's likelihood of re-election; and
- for the second year in a row, engaging in the highly unusual and undemocratic practice of abridging the usual period between providing notice of and holding an annual general meeting, and failing to provide the amount of notice required under corporate law.
Mithaq has nominated the following highly qualified nominees to Aimia's board of directors:
Turki Saleh A. AlRajhi – Mr. AlRajhi is the Chairman of the Board and Chief Executive Officer of Mithaq Holding Company, a decentralized family office headquartered in Saudi Arabia with investments in public equities, private equities, real estate, and income-producing assets in local and international markets. Mr. AlRajhi also serves as the Managing Director of Mithaq Capital SPC. He is responsible for drafting and executing the overall strategy, which includes making the capital allocation decisions, selection and compensation of the senior team, and writing the annual letter to the shareholders. Prior to joining Mithaq Holding Company in August 2014, Mr. AlRajhi was a Corporate Analyst in the Deal Advisory group of KPMG International Limited, where he sourced and provided fully-fledged M&A mandates and private equity investments in Saudi Arabia to KPMG's clients across the region, and co-founded and served as a Board Member and Head of the Executive Committee of the Riyadh Chamber of Commerce, Family Business Committee. Mr. AlRajhi is the Chairman of the Board of Themar Foods & Catering, one of Saudi Arabia's leading quick-service restaurants, Bunyah Real Estate and serves as the Chairman of the Board and a member of the Human Capital and Compensation Committee of The Children's Place, Inc. ("The Children's Place") (NASDAQ: PLCE), an omni-channel children's specialty portfolio of brands with an industry-leading digital-first operating model. Mr. AlRajhi is also the Vice Chairman of the Board of Trustees of Mozon Philanthropies, a foundation providing donations and support to healthcare and education projects. Mr. AlRajhi holds a Bachelor of Finance and Banking from Dar Al Uloom University in Saudi Arabia and completed the Value Investing Program from Columbia Business School.
Muhammad Asif Seemab – Mr. Seemab has over 18 years of experience in the financial services industry, including four years in the audit group of Ernst & Young. He is currently a Managing Director of Mithaq Holding Company, a leading opportunistic, shariah-compliant investor based in Saudi Arabia with diverse investments in public equities, real estate, private equity and income-producing assets in local and international markets. From January 2012 until joining Mithaq Holding Company in January 2019 as Portfolio Manager, Mr. Seemab was an Associate in the Asset Management Group of Mohammed Ibrahim AlSubdeaei & Sons Investment Company (MASIC), a family office based in Saudi Arabia that manages public equities, private equity funds, real estate funds and income-producing assets. Mr. Seemab is the Vice-Chairman of the Board and Chair of the Corporate Responsibility, Sustainability & Governance Committee and Human Capital and Compensation Committee of The Children's Place (NASDAQ: PLCE). Mr. Seemab also serves on the boards of TipTop Dry Cleaners Pvt Limited, Pick & Ship Pvt Limited and Themar Foods & Catering. Mr. Seemab is a Chartered Accountant and has a Bachelor of Commerce degree from Hailey College of Commerce at the University of the Punjab in Lahore, Pakistan.
Tariq Hamoodi – Mr. Hamoodi is a private investor and corporate finance advisor. He currently leads Goldenbridge Advisory Limited, founded in 2018 to manage his personal wealth and to advise and co-invest with other special situations and value-oriented institutional investment managers. Mr. Hamoodi also serves as Senior Advisor to a multi-billion-dollar private investment partnership where he works to originate private equity, credit, insurance and litigation-related transactions. From 2019 to 2020, he served as a Senior Advisor to Njord Partners LLP, a London-based special situations investment manager focused on the European middle market and was previously a partner at Bybrook Capital. His principal investment focus is on special situations investments (both public and private) across the capital structure and he has originated and led numerous litigation finance and private credit transactions with a gross claim value of over $10 billion. Mr. Hamoodi holds directorships at Goldenbridge Advisory Limited, GBADV Limited and Galion Capital Limited. Mr. Hamoodi holds a Bachelor of Business Administration degree from Wilfrid Laurier University.
Max Volsky – Mr. Volsky is an attorney and legal FinTech entrepreneur with a track record of pioneering advancements in the litigation finance industry. As the Co-Founder and Chief Investment Officer of LexShares, Mr. Volsky has been instrumental in transforming how plaintiffs access justice. With over 20 years of experience, Max has overseen more than 10,000 investments in legal claims, fostering significant growth in the litigation finance market. He has held key leadership roles at LexStone Capital, Schmidt Volsky LLP and LawMax, Inc. Mr. Volsky holds a Bachelor of Arts degree from New York University and a Juris Doctor degree from the Rutgers School of Law – Newark. He is a member of the New York State Bar and holds a Series 65 license. A thought leader in his field, Max has authored influential publications on litigation finance, including the seminal book, Investing in Justice.
Sharon Stern – Ms. Stern is a Canadian entrepreneur and real estate investor. Ms. Stern is the President of Eastmore Management and Metro Investments and has held such roles since November 2015 and February 2017, respectively. Eastmore Management and Metro Investments are investment entities focused on value creation through the acquisition, development and management of multi-residential and commercial properties in the downtown core of Montréal, Québec. Ms. Stern previously served as a trustee of Cedar Realty Trust (NYSE: CDR-C) between April 2021 and August 2022, 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. Between 2008 and 2012, Ms. Stern worked in strategy and corporate development at the Business Development Bank of Canada. Ms. Stern serves on the Faculty Advisory Board of the Desautels Faculty of Management at McGill University. She also serves on the board of Desautels Capital Management, is a judge and mentor at the Dobson Centre for Entrepreneurship and serves on the board of Pro-Montreal Entrepreneurs. In addition, Ms. Stern is an active angel investor in startup organizations. Ms. Stern holds a Bachelor of Arts in economics and world religion from McGill University and a Master of Public Affairs in economic policy from Brown University.
Naveed Kamran – Mr. Kamran is a highly accomplished finance professional with over 20 years of experience in banking, financial institutions, aviation and audit services. Known for driving organizational growth and enhancing financial processes, Mr. Kamran is a leader in finance process design, governance, controls and audits. Mr. Kamran currently serves as the Financial Reporting Manager at Flair Airlines Limited, where he delivers monthly financial performance presentations to the executive leadership team, advises on accounting and reporting standards and implements risk mitigation controls. Since joining in March 2023, Mr. Kamran has revamped the KPI reporting framework to align with industry standards, significantly improving process efficiencies. Before his current role, Mr. Kamran was the Senior Manager of Transaction Accounting at Canadian Western Bank, where he oversaw the financial disclosures for group entities and approved complex financial transactions, contributing to the bank's robust financial management. Mr. Kamran has previously held senior positions at several financial institutions in both Canada and Saudi Arabia after beginning his career with Ernst & Young LLP. Naveed is a Chartered Accountant and an associate member of The Institute of Chartered Accountants of Pakistan and holds a Bachelor of Commerce degree from the University of Karachi, Pakistan.
Mithaq is taking action to protect all shareholders by attempting to ensure the sorts of serious irregularities that took place at the 2023 annual general meeting (the "2023 Meeting") cannot reoccur. As previously disclosed, Mithaq has obtained evidence that Aimia's then leadership inappropriately influenced the voting of proxies submitted in connection with the 2023 Meeting. Had this conduct not occurred, Mithaq believes that none of the Aimia management nominees would have been elected at the 2023 Meeting.
The problematic behaviour uncovered by Mithaq is unacceptable and will not be tolerated at the Meeting. Mithaq expects that the Meeting be conducted in accordance with applicable corporate and securities laws and that Aimia will respect the right of shareholders to vote on all matters brought before the Meeting, including those shareholders who vote by proxy.
In particular, Mithaq will formally request Aimia's cooperation and confirmation in advance of the Meeting that, among other things: (a) an independent chair, not affiliated with Aimia, will oversee the Meeting; (b) an independent organization, not affiliated with Aimia, will scrutineer the Meeting; and (c) Mithaq be permitted to conduct a comprehensive proxy review immediately following the Meeting should it request such a review. Without Aimia's cooperation, Mithaq intends to seek assistance from the courts to ensure the conduct of the Meeting complies with applicable corporate and securities laws.
This press release is being issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues ("NI 62-103"), which requires a report to be filed under Aimia's profile on SEDAR+ (www.sedarplus.ca) containing additional information respecting the foregoing matters. Aimia's head office address is 1 University Avenue, Floor 3, Toronto, Ontario M5J 2P1.
Mithaq has filed on SEDAR+ an amended early warning report to disclose changes in certain material facts relating to its ownership of securities of Aimia in compliance with NI 62-103 (the "Amended Report"). In the Amended Report, Mithaq discloses that it has nominated the Mithaq Nominees for election to Aimia's board of directors at the Meeting.
The Amended Report further discloses that Mithaq may continue to explore from time to time a variety of alternatives it deems appropriate with respect to its investment in Aimia, in each case to the extent permitted under applicable law, including (a) increasing or decreasing its position in Aimia through, among other things, the acquisition or disposition of securities of Aimia, (b) entering into transactions that increase or hedge its economic exposure to such securities without affecting its beneficial ownership of such securities, and/or (c) continuing to hold its current position.
In addition to nominating the Mithaq Nominees for election to Aimia's board of directors and evaluating all options available to it in connection with the Meeting, Mithaq may also continue to explore from time to time other alternatives with respect to its investment in Aimia, in each case to the extent permitted under applicable law, including, but not limited to, developing plans or intentions or taking actions itself or with joint actors which relate to or would result in one or more of the transactions or matters referred to in paragraphs (a) through (k) of Item 5 of the Amended Report. For greater certainty, Mithaq may: (a) engage with management and/or the board of Aimia concerning the foregoing and its business, management, operations, capitalization, financial condition, governance, strategy and future plans (including taking any actions it deems appropriate to influence the affairs of Aimia); (b) initiate or make public or private proposals or offers involving Aimia, including (i) any takeover bid, amalgamation, consolidation, acquisition, business combination, arrangement, recapitalization, restructuring, liquidation, dissolution, disposition of assets or other similar transactions involving Aimia (including its subsidiaries and joint ventures or any of their respective securities or assets), and (ii) any waiver, amendment or modification to Aimia's articles of incorporation or by-laws; (c) initiate, solicit or join as a party, any litigation, arbitration or other proceeding (including regulatory proceedings) involving Aimia or any of its subsidiaries or any of its or their respective current or former directors or officers (including derivative actions and exercising any dissent rights); (d) initiate, propose, encourage, advise, influence or otherwise participate in the solicitation of proxies with respect to the voting of any securities of Aimia on any matter (including pursuant to any available exemptions under applicable laws); (e) grant any proxy with respect to the securities of Aimia; (f) engage in any short sale or similar transaction that derives value from a decline in Aimia's securities; (g) deposit any securities of Aimia into a voting trust, or subject any securities of Aimia to any agreement or arrangement with respect to the voting of such securities; (h) (i) call, requisition or seek to call or requisition a meeting of the shareholders of Aimia, (ii) seek election or appointment to, or representation on, the board of Aimia or (iii) effect the removal of any member of the board of Aimia or otherwise alter the composition of the board of Aimia (including by voting against the directors or through any "no vote" or similar campaign or proposing nominees); (i) submit, or induce any person to submit, any shareholder proposal; (j) enter into any agreement with Aimia (including any settlement or resolution agreement); (k) retain any advisors in furtherance of any of the foregoing; (l) make any request for securityholder list materials or other books and records of Aimia or any of its subsidiaries including under any statutory or regulatory provisions providing for shareholder access to such securityholder list materials, books and records of Aimia or its subsidiaries; (m) enter into discussions, agreements or understandings with any person with respect to or in contemplation of the foregoing or advise, assist, support or encourage any person to take any action consistent with the foregoing; and (n) make any public disclosure of any consideration, intention, plan or arrangement with respect to or in contemplation of any of the foregoing.
Although the foregoing reflects activities presently contemplated by Mithaq with respect to its investment in Aimia, the foregoing is subject to a number of factors, including but not limited to, the price of Aimia's securities, Aimia's business and financial condition and prospects, conditions in the securities markets and general economic and industry conditions, the availability of funds, the evaluation of other investment opportunities available to Mithaq, and is subject to change at any time, and there can be no assurance that Mithaq will take any of these additional actions referred to above.
In connection with the ongoing litigation between Aimia and Mithaq (the "Active Litigation"), Aimia has made allegations that Mithaq failed to disclose in certain early warning reports filed between February 3, 2023 and May 25, 2023, among other things, the intentions of Mithaq and its alleged joint actors, including the intention to acquire up to a 30% equity stake in Aimia and to reconstitute the board of directors of Aimia with a slate of directors that included representatives of Mithaq and Milkwood Capital (UK) Ltd. Furthermore, Aimia has made allegations that Mithaq's knowledge of its intention to acquire up to a 30% equity stake in Aimia constitutes material non-public information.
While a trial on these issues was scheduled in the Superior Court for four days starting January 8, 2024, the hearing dates were vacated at the joint request of the parties. The Active Litigation remains outstanding but no hearing dates or further litigation steps have been scheduled in the Superior Court. Mithaq has and continues to refute Aimia's allegations and believes that these allegations, if and when they are adjudicated on their merits, will fail. On February 13, 2024, Aimia filed a Notice of Application with the Ontario Securities Commission's Capital Markets Tribunal for relief in relation to allegations that are similar to those raised in the Superior Court. On April 11, 2024, the Capital Markets Tribunal granted Mithaq's motion to dismiss Aimia's Application and issued an order dismissing the Application.
For further information, including a copy of the corresponding report filed with Canadian securities regulators, please visit www.sedarplus.com or contact Mithaq Capital SPC, Saudi Arabia, P.O. Box 86611, Riyadh 11632, Attention: Turki Saleh AlRajhi ([email protected]).
The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable securities laws. Aimia shareholders are not being asked at this time to execute a proxy in favour of the Mithaq Nominees. In connection with any solicitation in respect of the Meeting, Mithaq will file a dissident information circular in due course in compliance with applicable corporate and securities laws.
Notwithstanding the foregoing, Mithaq is voluntarily providing the disclosure required under the Canada Business Corporations Act and section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations in accordance with corporate and securities laws applicable to public broadcast solicitations.
Any solicitation made by Mithaq in advance of the Meeting is, or will be, as applicable, made by Mithaq, and not by or on behalf of the management of Aimia. Any costs incurred for any solicitation will be borne by Mithaq, provided that, subject to applicable law, Mithaq may seek reimbursement from Aimia of Mithaq's out-of-pocket expenses, including proxy solicitation expenses and legal fees, incurred in connection therewith.
Mithaq is not soliciting proxies in connection with the Meeting at this time and Aimia shareholders are not being asked at this time to execute proxies in favour of the Mithaq Nominees. Proxies may be solicited by Mithaq pursuant to a dissident information circular sent to Aimia shareholders after which solicitations may be made by or on behalf of Mithaq 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 Mithaq who will not be specifically remunerated therefor. Mithaq may also solicit proxies in reliance on applicable exemptions to the solicitation requirements under corporate and securities laws, which may include by way of public broadcast, including through press releases, speeches or publications, and in any other manner permitted under applicable laws. Mithaq may engage the services of one or more agents and authorize other persons to assist in soliciting proxies on behalf of Mithaq.
Mithaq intends to retain Carson Proxy to assist Mithaq in soliciting Aimia shareholders should Mithaq commence a formal solicitation of proxies. Carson Proxy's responsibilities will principally include providing certain advisory and related services, including proxy solicitation. The anticipated cost of any solicitation is estimated to be up to $175,000 plus disbursements and success fee (if applicable).
Mithaq is not requesting that Aimia shareholders submit a proxy at this time. Once Mithaq has commenced a formal solicitation of proxies in connection with the Meeting, proxies may be revoked by instrument in writing by the shareholder giving the proxy or by its duly authorized officer or attorney, or in any other manner permitted under corporate and securities laws. Except as disclosed in this press release, none of Mithaq 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 Aimia's most recently completed financial year or in any proposed transaction that has materially affected or would materially affect Aimia 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 directors or the appointment of auditors. On October 3, 2023, Mithaq announced that it intended to commence of a formal offer by Mithaq Canada Inc., a wholly-owned subsidiary of Mithaq, to acquire all of the issued and outstanding common shares of Aimia not already owned by Mithaq or its affiliates for cash consideration of $3.66 per common share (the "Offer"). The Offer formally commenced on October 5, 2023 and subsequently expired and terminated at 11:59 p.m. (Vancouver time) on February 15, 2024 without any shares being taken up and acquired by Mithaq.
Mithaq is a segregated portfolio company and affiliate of Mithaq Holding Company, a family office based in Saudi Arabia with investments in public equities, real estate, private equity and income-producing assets in local and international markets.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document contains "forward-looking statements" (as defined under applicable securities laws). These statements relate to future events or future performance and reflect Mithaq's expectations, beliefs, plans, estimates, intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements include, but are not limited to, statements regarding the actions Mithaq may take in connection with the Meeting. Such forward-looking statements reflect Mithaq's current beliefs and are based on information currently available. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", "target", "intend", "could" or the negative of these terms or other comparable terminology.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and a number of factors could cause actual events or results to differ materially from the results discussed in the forward-looking statements. In evaluating these statements, readers should specifically consider various factors that may cause actual results to differ materially from any forward-looking statement. These factors include, but are not limited to, market and general economic conditions (including slowing economic growth, inflation and rising interest rates) and the dynamic nature of the industry in which Aimia operates.
Although the forward-looking information contained in this document is based upon what Mithaq believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. The forward-looking statements contained in this document are made as of the date of this document and should not be relied upon as representing views as of any date subsequent to the date of this document. Except as may be required by applicable law, Mithaq does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking information, whether as a result of new information, further developments or otherwise.
Neither Mithaq nor or any of its subsidiaries, affiliates, associates, officers, partners, employees, representatives and advisers make any representation or warranty, express or implied, as to the fairness, truth, fullness, accuracy or completeness of the information contained in this document or otherwise made available, nor as to the reasonableness of any assumption contained herein, and any liability therefore (including in respect of direct, indirect, consequential loss or damage) is expressly disclaimed. Nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future and no reliance, in whole or in part, should be placed on the fairness, accuracy, completeness or correctness of the information contained herein.
SOURCE Mithaq Capital SPC
Mithaq Capital SPC, +966 11 222 22 10, [email protected], Saudi Arabia, P.O. Box 86611, Riyadh 11632
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