dissident filing on sedarConcerned Shareholders Website Text
This website is brought to you by a group of five (5) Tenet Fintech Group Inc. (“Tenet” or the “Company”) shareholders residing in China and Canada (the “Concerned Shareholders”). We are very familiar with the Company’s vision and operations in both China and Canada. Collectively, we own about 8% of Tenet’s outstanding shares.
We are long-term focused investors and believe that the candidates that the Company’s management is proposing for election to the Board of Directors (the “Board”) of Tenet: Carol Penhale, Dylan Tinker and Paul Gibbons, are not suitable candidates and should not be elected to the Board. We detail below and in our information circular the reasons for our opposition to management’s proposed candidates, and the reasons why we are instead nominating for election the following candidates:
Johnson Joseph;
Liang (Golden) Qiu; and
Mayco Quiroz (collectively, the “Concerned Shareholders’ Nominees”)
We are urging you to vote for the Concerned Shareholders’ Nominees at the annual general meeting of shareholders (the “Meeting”) to be held on June 27, 2023 at 10:00 am (EDT) to help Tenet reach the potential that attracted and convinced most shareholders to invest in the Company.
We have retained Odyssey Trust Company to assist with providing a platform to vote your BLUE proxy form or BLUE voting instruction form. Please go to https://login.odysseytrust.com/pxlogin and enter your unique control number found on your form of proxy or voting instruction form accompanying the information circular you received to vote your shares. Alternatively, if you are a registered shareholder, you may return your proxy form via email to info@tenetagm2023.com or mail it to Odyssey Trust Co. at: Trader’s Bank Building, 702, 67 Yonge St., Toronto, ON M5E 1J8. If you are a beneficial shareholder (you hold your Tenet shares in a brokerage account), please contact your broker in regard to how to vote your shares.
If you have questions about your control number, please call Odyssey Trust Co. at 1 (888) 290-1175.
BACKGROUND
We were very distressed and upset to learn of the dismissal of Johnson Joseph as Chief Executive Officer of Tenet on April 28, 2023. Mr. Joseph is the co-founder of the Company and it is his vision of the impact of data and analytics on SMEs and on global capital markets that sets the direction for Tenet and all of its subsidiaries in China, in Canada and eventually around the world. We view his dismissal by the three management candidates for election as nothing short of a self-interested attempt to wrest control of the Company from the shareholders. Management’s candidates were able to do so by virtue of banding together in a slim majority of the Board, and were able to remove Mr. Joseph over his and Mr. Qiu’s objections. In this regard, we note that none of the management nominees have purchased or hold any common shares of the Company, despite ample opportunity to do so, and therefore their interests are not aligned with that of the shareholders of Tenet.
The timing to engage in an ill-advised corporate coup in order to entrench themselves at the controls of Tenet could not have been worse for the Company. Mr. Joseph was in the midst of an important financing for Tenet. That financing was cancelled by the brokers once they learned of the turn of events at Tenet, and not because Mr. Joseph was the Company’s CEO as has been suggested by management’s candidates. Unfortunately, the loss of Mr. Joseph’s years of experience in the business of the Company as well as the much needed capital injection was not the extent of the damage done to the Company by management’s nominees. Mr. Joseph has deep ties to some of the Company’s strategic partners in China who were shaken by the events and are now reassessing their relationship with the Company. Mr. Joseph had also built a highly competent and qualified team at Tenet in Canada; his removal led to losses in key members of this team, including the Company’s Chief Analytics Officer and Chief Technology Officer, which has had an unfavorable effect on the business of the Company. We believe that as these events unfolded, management’s nominees have not adequately kept the public informed as to the true extent of the damage done to the business of the Company. They have failed to live up to their promise of bringing more transparency to shareholders, but have instead kept a number of material events hidden from shareholders, one of which actually led to a temporary trading halt of the Company’s stock on May 5, 2023. Their actions, lack of understanding of Tenet’s business and their inability to raise capital have combined to put the Company’s very survival, including its operations in China, in jeopardy.
WHY THE BOARD NEEDS TO CHANGE
Simply put, the decision by management’s candidates to terminate Mr. Joseph’s employment as Chief Executive Officer on April 28, 2023 was extremely short-sighted. Tenet is a venture-stage company with a unique positioning in the business data and analytics space. The Company’s Business Hub gives it access to unique data sets on SMEs that are seen as extremely valuable by various experts in the space. While the Company has been generating revenue primarily by facilitating credit transactions on the Business Hub over the past three years in China, what the Company was really doing was developing the means and channels to acquire and accumulate data on SMEs in the country. The Company saw its operations in China as the initial phase of its plans to build a global network of SMEs to gather SME data that could then be transformed into products for capital markets, financial institutions and government agencies around the world. The disruption of the Company’s business by management’s candidates came at a time when the Company was beginning to develop this critical aspect of its business plan. Without this emphasis on the development of data-driven analytics products, Tenet would be limited to being nothing more than a lending platform with limited revenue and limited profit margins along the lines of the supply-chain transactions facilitated by the Business Hub in China. This would in turn limit shareholder value. Tenet’s future is not as a Chinese supply-chain transaction facilitator but rather as a global analytics company where revenue and profit margins far exceed the business model under which the Company has operated in China for the past three years. This is something that the management’s candidates have failed to understand, as evidenced by their dismantling of the Company’s Canadian operations where Tenet’s analytics intellectual property was being developed.
The Concerned Shareholders understand that achieving Mr. Joseph’s vision for the Company and maximizing shareholder value will require capital. Mr. Joseph has proven in the past that he has the ability to raise the capital Tenet needs to be successful in that endeavor. We would like to remind our fellow shareholders that it was under Mr. Joseph’s leadership that the Company closed a $52M prospectus financing in the summer of 2021, which is one of the largest non-resource financings ever closed by a CSE listed company and contributed to taking Tenet’s market capitalization to over $1B. The Concerned Shareholders are confident that with the Concerned Shareholders’ Nominees on the Board, the Company will once again be able to attract capital on favorable terms to execute its business plan.
Despite the Concerned Shareholders expressing their concerns, management’s candidates have not taken any action to even confirm the seriousness of the issues, much less deal with them. Instead, management’s candidates have taken deliberate steps to entrench themselves, including ignoring numerous attempts from the Concerned Shareholders, other shareholders, and brokers with long-term relationships with Tenet to discuss the issues with them to try and solve these problems before they got worse. It is now clear to the Concerned Shareholders that management’s candidates have no plan, ability, qualifications or competence to operate Tenet’s business. On June 1, 2023, management’s candidates announced a desperate plan to conduct an extremely dilutive financing, which would only further erode shareholder value. Management’s candidates’ actions and inactions have resulted in the Concerned Shareholders, acting in the best interests of the Corporation, having to take matters into their own hands as a last resort by delivering an advance notice of nomination of directors and an information circular, all at their own expense. By taking matters into their own hands, the Concerned Shareholders are ensuring that the future direction of Tenet is now in the hands of the Company’s shareholders.
IT IS TIME TO MAKE THE CHANGE REQUESTED BY THE CONCERNED SHAREHOLDERS TO THE BOARD BY ELECTING THE CONCERNED SHAREHOLDERS’ NOMINEES TO THE BOARD AND HELP GUIDE TENET TOWARDS A PROSPEROUS FUTURE.
To ensure that the Company’s best days are ahead, the Concerned Shareholders recommend that fellow shareholders vote using only the BLUE form of proxy FOR the three Concerned Shareholder nominees who will provide industry- specific expertise, capital market and business execution experience all while being vigilant on expenses and the capital share structure.
If you did not receive the Concerned Shareholders’ information circular in the mail or have any questions related to the content of this website, please contact the Concerned Shareholders by email at info@tenetgm2023.com.
ABOUT THE CONCERNED SHAREHOLDERS
Kelong Chen
Kelong Chen has over 30 years of experience in the jewelry business. He is the co-founder of CHJ Jewelry Inc., a publicly listed company on the Shenzhen Stock Exchange (002345). CHJ Jewelry Inc. has over 1,000 chain stores across china and ranks as one of the top 500 most valuable brands in China. Mr. Chen is also the Chairman of Jiu Dong Ltd. (“Jiu Dong”). In December 2017, Jiu Dong invested $9.8M and Tenet invested $12.2M to create Tenet’s Asia Synergy Financial Capital (ASFC) subsidiary. Jiu Dong currently owns a 49% equity stake in ASFC, making the company one of Tenet’s most important allies in China.
Changsheng Zhuo
Changsheng Zhuo has spent the past 25 years in the textile and commercial lending industries. He is a cofounder of Jiu Dong and one of the company’s largest shareholders. Jiu Dong was one of the first commercial lenders on Tenet’s Business Hub in China and has used the platform to service over 5,000 SMEs since 2018. Mr. Zhuo is also the founder of Meilaiya Textile Inc., which was merged with Licheng Textile Inc. in 2016. Meilaiya was an underwear manufacturer with over 2,000 employees servicing over 700 brands worldwide.
Pierre Lalonde
Pierre Lalonde is a Chartered Accountant who spent nearly 15 years working as an accountant at Northern Telecom. After leaving Northern Telecom, his background in finance took him to BMO Nesbitt Burns where he worked as an Investment Advisor before retiring in 2007.
Barbara Hickson
Barbara Hickson has 17 years of service in senior management positions with Roundtree Mackintosh and Nestle USA, which included being a member of the Board of Directors of Rowntree Canada. She has worked in the UK, South Africa, Canada, the USA and Australia. After leaving Nestle USA, she became an Investment Advisor with RBC Dominion Securities in Canada and retired as a VP after 17 years of service. She has a BSC (Hons) from the University of Leeds (UK) and an MBA from York University (Canada).
Joseph Zenha
Joseph Zenha was an Investment Advisor and VP at National Bank Financial for 20 years. Mr. Zenha retired in 2020.
For more information, including the Concerned Shareholders’ Nominees’ biographies and short-term action plan, we invite you to click the following link to download our information circular.
You may also download our BLUE form of proxy and BLUE voter information form below:
Form of proxy
Voter information form
INFORMATION IN SUPPORT OF PUBLIC BROADCAST SOLICITATION
The Concerned Shareholders are relying on the exemption under section 9.2(4) of National Instrument 51- 102 – Continuous Disclosure Obligations and section 150(1.2) of the Canada Business Corporations Act to make this public broadcast solicitation. The following information is provided in accordance with securities and corporate laws applicable to public broadcast solicitations.
This solicitation is being made by the Concerned Shareholders, who are Kelong Chen, Changsheng Zhuo, Pierre Lalonde, Barbara Hickson and Joseph Zenha, and not by or on behalf of the management of Tenet. The registered and mailing address of Tenet is 705 - 119 Spadina Ave., Toronto, Ontario, M5V 2L1.
The Concerned Shareholders have filed an information circular containing the information required by Form 51-102F5 – Information Circular in respect of the Founder’s Nominees, which is available under Tenet’s profile on SEDAR at www.SEDAR.com.
A registered shareholder who has given a proxy may revoke it by depositing an instrument or act in writing executed or, in Quebec, signed by the shareholder or by the shareholder’s personal representative authorized in writing or, where the registered shareholder is a corporation, a duly authorized officer or attorney of the corporation and delivered to the registered office of the Company or to TSX Trust at P.O. Box 721 Agincourt, ON M1S 0A1 at any time up to and including the last business day preceding the day of the Meeting, or any adjournment(s) or postponement(s) thereof, or to the Chairman at the Meeting or any adjournment(s) or postponement(s) thereof, or in any other manner provided by law.
If you are a non-registered shareholder (Beneficial Shareholder), you must follow the instructions on your voting instruction form to revoke or amend any prior voting instructions.
Proxies for the Special Meeting may be solicited by mail, telephone, email or other electronic means as well as by newspaper or other media advertising, and in person by associates, agents, representatives and employees of the Concerned Shareholders, who will not be specifically remunerated therefor. In addition, the Concerned Shareholders may solicit proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian securities laws, conveyed by way of public broadcast, including through press releases, speeches or publications, and by any other manner permitted under applicable Canadian laws. All costs incurred for any solicitation will be borne directly by the Concerned Shareholders. Any solicitation of shareholders will be conducted by mail and may be supplemented by telephone or other personal contact to be made without special compensation by the Concerned Shareholders and their affiliates and associates. The Concerned Shareholders will seek reimbursement from Tenet for fees incurred in connection with a successful reconstitution of the Board.
Proxies may be solicited by mail, facsimile, telephone, telegraph, Internet, in person and by advertisements.
To the knowledge of the Concerned Shareholders, neither they nor any of their associates or representatives, or their respective associates or affiliates, has: (i) any material interest, direct or indirect, in any transaction since the beginning of Tenet’s most recently completed financial year or in any proposed transaction that has materially affected or would materially affect Tenet or any of its subsidiaries; or (ii) any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter currently known to be acted upon at the Meeting, other than the election of directors of Tenet.