News! 7th Press Release posted on Sedar Aug 6th - Summary Concerned Shareholders Summarize Failures of Karnalyte
Time to Stop the Oppression of Karnalyte Shareholders by
Gujarat State Fertilizers & Chemicals Limited and the Interim CEO
• Concerned Shareholders have outlined the failure of the Interim CEO and Gujarat State Fertilizers & Chemicals Limited’s (“GSFC”) nominees (“GSFC Nominees”) on the Board to comply with basic corporate governance principles, Canadian securities law, TSX rules and regulations, contractual provisions and to avoid conflicts of interest and self-dealing
• Concerned Shareholders have also detailed the Interim CEO’s and the GSFC Nominees’ inability to formulate a strategy for Karnalyte as well as their misguided views on the credibility and value of a non-independent GSFC in-house pre-feasibility study on Karnalyte’s nitrogen project prepared at nominal cost • Concerned Shareholders believe it is time to stop GSFC’s, the GSFC Nominees’, and the Interim
CEO’s oppression of Karnalyte shareholders by appointing a qualified, experienced and
independent board of directors Saskatoon, SK, August 6, 2020 — On July 7, 2020, a group of Karnalyte Resources Inc. (TSX: KRN) (“Karnalyte” or the "Company") shareholders (the “Concerned Shareholders”), owning not less than 5% of the issued and outstanding shares of the Company, requisitioned (the “Requisition”) the Board to call and hold a special meeting (the "Special Meeting") of shareholders for the purpose of replacing the Board with a new independent boa rd capable of pursuing opportunities in the Saskatchewan agricultural and fertilizer industry available to the Company that have the potential to create value for all shareholders.
The Concerned Shareholders requested that the Board be constituted with six (6) members, four (4) of whom are highly qualified nominees to be proposed by the Concerned Shareholders, and two (2) of whom will be nominees (the “GSFC Nominees”) of Gujarat State Fertilizers & Chemicals Limited (“GSFC”), in accordance with GSFC’s contractual rights to appoint nominees to the Board.
On July 27 2020, Karnalyte called the Special Meeting to be held on December 15, 2020, almost five months from the date of the notice of meeting. Karnalyte’s Actions
A summary of Karnalyte’s actions over the past 18 months is set forth below. The Concerned Shareholders believe that the Board, which is controlled by the GSFC Nominees and assisted by the Interim CEO, has not: • Publicly announced whether it has initiated an independent investigation into apparent breaches of Karnalyte’s Code of Conduct
• Complied with contractual provisions of legal agreements between GSFC and Karnalyte
• Complied with Canadian securities law and TSX rules and regulations regarding board and audit committee independence
• Used the proceeds from the rights offering for the purposes they were intended for
• Advanced the investigation of the nitrogen project in any meaningful way in the past year
• Created any value for shareholders The Concerned Shareholders believe that what the GSFC Nominees, which control the Board, have done is: • Call the Special Meeting, but set the date of the Special Meeting almost five months from now
• Control the Board when they are not legally, contractually, or otherwise entitled to
• Entrench themselves as directors for a period of 18 months, and now for an additional five months
• Hire an unqualified and inexperienced Interim CEO who admits she doesn’t know what she is doing
• Engage in conflicts of interest and self-dealing by hiring GSFC to prepare a non-independent,
GSFC in-house, pre-feasibility study on the nitrogen project
• Outsource the job of developing a corporate strategy for Karnalyte to an accounting and tax firm
• Oppress the shareholders • Not create any value for the shareholders
Peter Matson, one of the Concerned Shareholders and amongst the five largest shareholders of Karnalyte, noted that “As long-term significant shareholders of Karnalyte, we beleive the events of this latest chapter in Karnalyte’s history is the most egregious, as the litany of failures, total disregard for Canadian laws, rules and regulations, and the blatant conflicts of interest and self-dealing are not creating any shareholder value.” Mr. Matson continued: “Because of this, the Concerned Shareholders felt they had no choice but to requisition the Special Meeting in order to stop these breaches and failures and to try and give Karnalyte a chance to create value for all shareholders.” Contacts Peter Matson, on behalf of the Concerned Shareholders and the Nominees, welcomes the opportunity to engage with fellow shareholders. Mr. Matson can be reached at peter.matson.bell@gmail.com. Additional Information
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. Although a record and meeting date for the Special Meeting was established by Karnalyte on July 27, 2020, shareholders are not being asked at this time to execute a proxy in favor of the Nominees. In connection with the Special Meeting, the Concerned Shareholders may file a dissident information circular in due course in compliance with applicable securities laws. The Concerned Shareholders are not soliciting proxies in connection with the Special Meeting at this time. The Concerned Shareholders may engage the services of one or more agents and authorize other persons to assist in soliciting proxies on behalf of the Concerned Shareholders. Any proxies solicited by or on behalf of the Concerned Shareholders, or by any other agent, may be solicited pursuant to a dissident information circular or by way of public broadcast, including through press releases, speeches or publications and by any other manner permitted under Canadian corporate and securities laws. Any such proxies may be revoked by instrument in writing executed by a shareholder or by his or her attorney authorized in writing or, if the shareholder is a body corporate, by an officer or attorney thereof duly
authorized or by any other manner permitted by law.
The registered address of Karnalyte is located at 2100 Livingston Place, 222 3 Ave SW Calgary, AB T2P 0B4. A copy of this press release may be obtained on the Company’s SEDAR profile at www.sedar.com