National Post (National Edition)
UrtheCast’s AGM promises to be tense affair
Four new directors can’t vote in tactic holders call ‘bullying’
If events over the past week are any indication, the June 25 annual meeting of UrtheCast Corp. has the potential to be a dandy given that shareholders have a slew of governance and price performance perspectives to be upset.
The Vancouver-based satellite company, which has extensive operations in Spain and which three years back raised equity at $4 a subscription receipt, has replaced three of its Canada-based directors, kept two and brought in four nominees, all American, who according to the circular, have no equity stake.
Some shareholders have used the word “bullying” to describe matters that are occurring a few weeks after UrtheCast, named the country’s fastest growing tech company by Deloitte 18 months ago, raised $34 million of equity and snared a US$142-million secured credit facility.
“All the shareholders are perplexed. What happened?” asked one shareholder who has watched the shares fall from about $1.50 in December to 28 cents on Friday. In his view, two press releases, neither positive to shareholders, played key roles. “We were on the cusp of building the most revolutionary new satellites that are going to disrupt the industry. And now this.”
The company’s chief financial officer didn’t return a call seeking a comment.
But the board coup is not a slamdunk. Before management’s six nominees get elected, shareholders have to approve a bylaw amendment allowing 75 per cent of its directors to be non-Canadian residents. Given the record date is May 8, shareholders can be expected to take umbrage at what amounts to a takeover without a premium.
If that bylaw change is not approved, the meeting could get very complicated.
One patient long-standing shareholder said, “the old shareholders will look at the new slate and think it’s laughable.” Added another: “It’s a sad commentary that Canadian shareholders who have been supporting the company don’t have representation on the board.” It’s understood potential directors designed to represent such shareholders were advanced but rejected.
Noel Atkinson, an analyst at Clarus Securities, said he hopes “the turbulence in the management and board ranks … is short-lived and the go-forward business … can convince current and prospective customers to move past the noise.” Clarus, along with Canaccord, raised $20.7 million of equity, part of the $34-million raise.
The board activity has been frenetic. Greg Nordal (interim chief executive) resigned this week. Another, Letitia (Tish) Long, decided not to stand for re-election, while on Thursday the company said Tye Burt, chairman for most of the time UrtheCast has been public would, contrary to what was said the day before, be leaving immediately and will not be at the annual meeting. No reason was given for his resignation. Calls left with Burt, who is understood to have voted against the new slate, were not returned.
Instead Adam Vore, appointed to the board on May 25, will be interim chair until the meeting, after which the “reconstituted Board will appoint a Chair.” (Mark Piegza, another newcomer, was also appointed to the board on May 25.) In the circular, Vore is listed as managing director of Seaport Global Securities, while Piegza is the founder of Convergence Advisors. The board has determined Vore is independent — even though his firm, Seaport, acted as the company’s adviser on its recent senior secured financing. A call to Vore seeking a comment was not returned.
Both Vore and Piegza were named to the board under a backstop agreement between the company and a numbered B.C. company. (Vancouver-based Skidmore Group is believed to the backstop party. We were unable to reach Rick Christiaanse, Skidmore’s chief commercial officer and the person named in the documentation for confirmation.)
Atkinson said the numbered company bought about US$6 million in the non-brokered private placement and agreed to provide another US$6 million to support the company’s Spanish bank debt restructuring/repayment.
Stay tuned. It promises to be busy.