News from Stockwatch. Enough is enough lets right this ship...
Atikwa dissidents seek to replace board
2013-08-15 15:18 AT - News Release
Mr. James Garnett, concerned shareholder, reports
THE CONCERNED SHAREHOLDERS OF ATIKWA RESOURCES INC. FILE LETTER AND DISSIDENT PROXY CIRCULAR
Certain concerned shareholders of Atikwa Resources Inc. have filed a letter to shareholders, dissident circular and form of proxy on SEDAR for the replacement of the company's existing directors.
The concerned shareholders, consisting of James A. Garnett, Steven D. May, John D. Chodzicki and Michael K. Stark, are asking Atikwa shareholders to vote for change by electing a new board of directors at the upcoming annual and special meeting of shareholders to be held on Aug. 30, 2013.
IT'S TIME FOR A CHANGE
The Concerned Shareholders are proposing these essential changes to the Board because we have grave concerns about the current lack of direction of Atikwa.
Atikwa has not made progress over the past three years in developing its oil properties and consequently the Company's share price has fallen from a high of $0.175 in February 2010 to $0.01. We are of the view that much of this poor performance is a result of the shortcomings of current management, led by Sean Kehoe, the Company's CEO. Consider the following:
Since 2011, the Company has failed to bring in any new production but has maintained high overhead with general and administrative expenses of $1,437,809 in the year ended February 28, 2013 (including $715,534 in salaries and consulting fees) and $1,450,332 in the year ended February 28, 2012 (including $895,206 in salaries and consulting fees).
The Company's joint venture partner has filed a claim against Atikwa for $2,500,000 plus interest and costs for damages resulting from the wrong-doing on the part of Atikwa, as operator, including but not limited to: (i) failing to carry on all operations lawfully, diligently, in a good workmanlike manner and in accordance with good oilfield practices; (ii) failing to pay all accounts related to operations as they became due and payable; (iii) incurring expenses and issuing invoices for amounts that are improper, excessive, unreasonable and otherwise not permitted under the farmout agreement; and (iv) failing to properly control and manage the exploration, development and operation of the lands for the joint account and to keep the joint venture partner properly informed with respect to operations planned or conducted on the joint lands. Certain of the Company's contractors have filed claims against the Company in relation to non-payment of accounts. In particular, the Company is being sued by a coil tubing and stimulation services company for an aggregate of $58,388.09, and is being sued by a well service contractor for an aggregate of $53,961.19.
Management has allowed leases to expire on key Company assets with no compensation, reducing the net worth of the Company. In 2013, seven leases expired on the Company's Porcupine Hills property representing 3,754.5 gross and net acres and one lease expired on the Company's Windfall property representing 1,920 gross acres and 1,728 net acres. These lands were categorized as exploration and evaluation assets on the balance sheet and the write down asset impairment recognized was $7,314,828 and $273,349 on the Porcupine Hills and Windfall properties, respectively. By allowing the leases to expire, management failed to realize any value for the Company.
The Company entered into a loan agreement to obtain a $3 million credit facility on unfavourable terms, including an interest rate of 1.25% per month, a $2,000 monthly monitoring fee, a $60,000 facility fee and fixed and floating charge debentures in the amount of $20,000,000 against all of the Company's real property and reserves. The Company received funds from Marquest Asset Management Inc. or one of its subsidiaries in 2012 to drill two wells which were staked off but were never drilled. Atikwa subsequently received additional funding to drill certain Spearfish wells with Antler River Resources. Atikwa was to repay such funds from production; however, as a result of the Company's failure to service the wells, production has fallen off and Atikwa has not made any payments under the funding agreement since August of 2012.
Atikwa aggressively attempted a consolidation of the company's share structure by as much as 1 for 30, which was rejected by shareholders. Such a move would have minimized any current shareholders' position and make an investment recovery all but impossible.
The Company has failed to keep shareholders informed of developments and has been unwilling to engage in dialogue with its shareholders regarding the Company's future. Efforts made to discuss issues relating to Company business by Mr. May and Mr. Garnett at the Atikwa offices on June 13, 2013 and by other shareholders at the shareholder meeting on June 14, 2013 and on both occasions Mr. Kehoe deemed that the location was NOT appropriate for discussions of Company business. The Company's unwillingness to engage with its shareholders is further evidenced by its disclosure record.
IN OUR VIEW MANAGEMENT'S PROPOSED BOARD WILL NOT ACT IN THE BEST INTERESTS OF ATIKWA
In their proxy materials for the Meeting, management of the Company is proposing a new Board of Directors for Atikwa (the "Hansar Nominees") that: are all nominees of Hansar Energy Corp. ("Hansar"), in spite of the fact that Atikwa has not completed its due diligence with respect to Hansar, and has not entered into a definitive agreement setting out the specific terms and conditions of the proposed reverse takeover or other reorganization with Hansar (the "Reorganization"); has no personal interest in Atikwa, as none of the Hansar Nominees own shares of Atikwa; and will be in a direct conflict of interest while negotiating and settling terms of the Reorganization on behalf of Atikwa, as Hansar Nominees hold the following positions in Hansar:
Andrew Watts: President, CEO and Director of Hansar
Paul Baay: Director of Hansar
Trevor Mitzel: Director of Hansar.
A NEW, EXPERIENCED AND REFRESHED BOARD
We have nominated for election a group of highly-qualified individuals that we believe will unlock the potential that Atikwa possesses. Our proposed nominees are John D. Chodzicki, James A. Garnett, Steven D. May, and Michael K. Stark. They will act with honesty and integrity, making decisions that will be in the best interest of shareholders. They will take immediate actions to cut down the high general and administrative expenses, take steps to increase Atikwa's production, and engage with experts in the oil and gas industry to consult with the Board on the strategic direction of the Company. Please see the biographies of our proposed nominees contained in the dissident proxy circular.
ENOUGH IS ENOUGH
We believe your investment is at risk if the Hansar Nominees are elected. Our nominee directors are ready to hit the ground running and will provide Atikwa with the leadership necessary to realize its full potential. We hope that you, like us, see the opportunity that we have to match this excellent group of individuals with the excellent asset base in Atikwa. It is only with your support we can start to unlock the true potential of Atikwa.