G&W comment on Court Decision
Mr. William Wells, concerned shareholder, reports
CONCERNED SHAREHOLDERS OF BIONICHE COMMENT ON COURT DECISION
The concerned shareholders of Bioniche Life Sciences Inc., William (Bill) M. Wells, former chief executive officer of Biovail Corp., and Greg Gubitz, former general counsel and senior vice-president of corporate development at Biovail, note the Ontario Superior Court's decision that will see Bioniche shareholders hold the board accountable for its actions at a meeting of shareholders on Nov. 5, 2013. The concerned shareholders have posted the court decision to the Save Bioniche website so that shareholders can review.
"We respect the decision of the court and note that the judge concluded that the case was a close call. We are pleased that almost 20 per cent of the company's outstanding shares were registered in support of a shareholders meeting taking place on Aug. 27, via letters of support from shareholders received as part of this process -- in addition to the millions of other shares that continue to be pledged to the campaign for a better future for Bioniche," said Mr. Wells, one of the concerned shareholders of Bioniche. "While the court ruled against us, some very significant matters, which will benefit all Bioniche shareholders, have resulted from our efforts. We look forward to the November election."
The concerned shareholder efforts have resulted in:
Bioniche confirming that shareholders will have the right to vote on any proposed sale of Animal Health;
Bioniche and the court confirming that no break fee will be payable by Bioniche on any proposed sale of Animal Health;
Confirmation that the shareholder vote will take place on Nov. 5, 2013, without further delay.
Continued Mr. Wells: "Clearly, if the board believed that it had the support of shareholders and support for the ill-advised plan to divest the Animal Health business, it would have allowed a vote to take place immediately. Instead, the incumbent directors saw fit to incur significant legal costs to continue to entrench themselves until they are forced to face shareholders in November. The board may have secured a temporary reprieve, but it has lost all credibility in the eyes of shareholders as it continues to deviate from the most basic notions of good governance and shareholder democracy. This board does not have a mandate to divest the Animal Health business, and the concerned shareholders are not going away. On Nov. 5, 2013, long-suffering shareholders will hold the board accountable for its decisions.
"We thank the numerous shareholders -- holders of millions of Bioniche shares -- who have joined the campaign for a better future for Bioniche and those who provided signed letters of support that were presented to the court. If you haven't signed up yet, please do so at [Save Bioniche website]."
Excerpts from the court ruling
Notwithstanding the board's success in delaying the vote, the concerned shareholders are pleased with some of the comments from the court in its ruling, including:
(1) Recognition of the lengths the board will go to in order to shield information
"Bioniche filed heavily redacted versions of the minutes of the meetings of its board and special committee held on May 3, 2013. In light of the breadth of those redactions, one must proceed cautiously in considering the weight to be attached to the company's evidence about what transpired at those meetings," Wells versus Bioniche Life Sciences Inc., 2013, ONSC 4871, page 9.
(2) The court's recognition that the case was close, but Bioniche's commitment to make any transaction (an action the concerned shareholders do not support) conditional on a shareholder vote and the board chairman's testimony that it is unlikely that a break fee would be part of any proposed arrangement, somewhat mitigated the risk in delaying the meeting
"Although I have difficulty in understanding why half a year is necessary in order to amass sufficient evidence to allow shareholders to make an informed decision on the composition of the board of directors and the different groups' visions for the company, Bioniche's public commitment to make any divestiture agreement for Animal Health conditional on shareholder approval and [board chairman] Rae's testimony that break fees will be unlikely for any such agreement remove a major part of the prejudice associated with such a delay," Wells versus Bioniche Life Sciences Inc., 2013, ONSC 4871, page 25.
(3) The court's warning that Bioniche should not deviate from its commitments or attempt to further delay the meeting of shareholders
"Of course, any departure from that evidence by Bioniche [regarding a break fee on the sale of Animal Health] or any attempt to postpone the Nov. 5 [annual general meeting] date no doubt would be looked upon very unfavourably by a court in the event the applicants were compelled to seek any further relief tied to that evidence," Wells versus Bioniche Life Sciences Inc., 2013, ONSC 4871, page 29.
Mr. Wells concluded: "When shareholders are given the opportunity in November to vote to replace the Bioniche board of directors, they will be faced with a simple choice: allow the current board and [chief executive officer], who have overseen long-term value destruction, the opportunity to finish the job by selling off the Animal Health business, or vote for new, credible directors who, together with an experienced management team, will oversee a value-creation plan that will see Bioniche retain and grow the Animal Health business. More on this and other important information, including [frequently asked questions] that are routinely updated as we receive questions from shareholders, can be found [on the Save Bioniche website]."
Information in support of public broadcast solicitation
Mr. Wells and Mr. Gubitz are relying on the exemptions under Section 150(1.2) of the Canada Business Corporations Act and Section 9.2(4) of National Instrument 51-102 -- Continuous Disclosure Obligations of the Canadian Securities Administrators to make this public broadcast solicitation. The following information is provided in accordance with corporate and securities laws applicable to public broadcast solicitations.
This solicitation is being made by the concerned shareholders and not by or on behalf of the management of Bioniche Life Sciences.
Bioniche's address is 231 Dundas St. East, Belleville, Ont., K8N 1E2.
The concerned shareholders have filed an information circular containing the information required by the CBCA and Form 51-102F5 -- Information Circular of the Canadian Securities Administrators in respect of its proposed nominees. Such circular is available under Bioniche's company profile on SEDAR.
All costs incurred for the solicitation will be borne by the concerned shareholders, subject to reimbursement by Bioniche in accordance with the provisions of the CBCA.
To the knowledge of the concerned shareholders, none of the proposed nominees as directors, or their respective associates or affiliates, had or has any material interest, direct or indirect, in (i) any transaction since the beginning of Bioniche's most recently completed financial year; or (ii) in any proposed transaction which has materially affected or would materially affect Bioniche or any of its subsidiaries.
As no matters other than the election of directors are currently contemplated to be acted upon at the called meeting of Bioniche shareholders, none of the concerned shareholders or their respective associates or affiliates has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the meeting of Bioniche shareholders other than the election of directors.