Post by
oats on Aug 20, 2024 11:35am
Ceapro / Aeterna Merger Assurances
In a meeting in January with Gilles Gagnon, we were provided with the assurance that once the merger was completed, ALL funding for anything related to Macrilen would cease immediately. That statement came right from the horses mouth. Further, the only expectation after the funding halt would be for the company to rid itself of Macrelin and hopefully receive $5 million as a final payment, then this initiative would be dead.
Interestingly, I spoke to Gilles several times over the last many years about Aeterna Zentaris. I told Gilles many times that I though Zentaris was a worthless pieces of junk that had cash, that was it. Gilles Gagnon agreed with that. The only positive thing he had to say was that there were some strategic people in Germany that were very proficient and would hire them if he could.
We were also assured that after the completion of the Merger, the new company would have between $30 and $32 million US in the bank. All funds were intended to be used for Ceapro initiatives. Again, this was not a hopeful statement it was confidently and adamantly stated.
I see that Jenene Thomas is still listed as the IR rep. I can't state enough of how important it is when someone agrees to provide assurances in order to get votes that they will do what they said they were going to do. My conversations with Gilles regarding Jenene Thomas and her very poor performance started many years ago but in the past couple of years Gilles agreed that she was not doing her job and a replacement needed to be found. Within the past year and half, he agreed even more that she needed to be terminated. Gilles had indicated on a few occasions that he had been conducting interviews to hire someone for an in-house position. Obviously, he was not honest about replacing Jenene Thomas.
When we asked that Gilles not seek re-election, it was immediately stated that a succession plan had already been implemented and that a search for Gilles replacement had already started prior to our request. To move this process along regarding the assurances, it was agreed that he would not seek re-election. Obviously, this was another example of his dishonestly.
With regards to taking legal action against the company, the opportuntiy lies within the lack of disclosure from Gilles with regards to spending almost $2 million US on legal fees for the merger before the merger was announced in December of 2023. The spending of these monies was, without a doubt, a material change within the company based on its size and the % of overall cash on the books. the lack of disclosure of a material change in a cash postion and the reasons for the significant charge are a prolbem. One has to wonder why they decided to go down this path and feel that blowing all this money on legal fees was not a material change to the company. The proper thing to do would have been to disclose the "intent to pursue" the opportunity but for some reason, they decided to forgoe their fiduciary duty. I don't believe the disclosure document that mapped out the events as they happend is accurate.
The other interesting part is that we were told that it was Aeterna Zentaris that came knocking on the door to do a deal in the fall of 2022. If you peruse the transaction details, Ceapro would have been obligated to pay a $500k penalty if the deal did not get completed. This makes no sense since it was Aeterna Zentaris that came knocking on Ceapro's door. Why would anyone agree to this? The descriptions of the chain of events leading to the merger are flawed.
I don't like washing this out in public but due to the lack of integrity that Gilles Gagnon has shown and the very bad postion that he put our group in, he is deserving of the questioning of his integrity.
The recent release of the financials shows that Gilles Gagnon's business model of the past many years has been a failure. Yes, the initiatives that have been on the table are still there but the initiatives have largely been mismanaged in various ways and Ceapro shareholders have paid a huge price for this mismanagment. However, regardless of the initiatives, Gilles Gagnon has been unable to tap into a new revenue stream or simply expand the current customer base with existing saleable products. It also appears to me that Gilles Gagnon was not truthful with Ceapro shareholders as it relates to the drop in revenues that began in 2023. This last quarter sucked, plain and simple. It is clear that he was not capable of running Ceapro nor the new company. I voted against him for good reason.
I asked Gilles in January if one of the reasons for this merger and the pathetic ratio offered was to get rid of our group's significant ownership that was right at 16.5%. He nervoulsly laughed and said "no". Gilles Gagnon is not a good liar.
I have many years of notes of our discussions and will delve into more topics later but want to leave with one last tidbit. After last years Q2 financials were reported, I was in Edmonton sitting across the table from my father who has been a shareholder just as long as I have been, he was 86 years old and a very frustrated shareholder. After the results were published, he told me that it was time for Gilles Gagnon to step down. I felt the same way and told that to Gilles in a converstation that we had the next day. In fact, I told Gilles several times over that past year that we needed a new face of the company, that he had grown stagnant and ineffective, the same as Jenene Thomas. He agreedt that we needed a new face that could bring expertise to the C suite. That was the general theme from him, lots of talk and no action.
I kept telling Gilles for years that his barometer was the stock price, he never agreed. I think the underlying problem was and still is that he feels he is more important than the company is.
Comment by
lscfa on Aug 20, 2024 2:12pm
The legal fees first jumped way up in Q3/2023 as reported Nov 29, 2023. The MD&A noted significant legal fees were incurred mostly for conducting due diligence on one particular opportunity.
Comment by
Hopeforthebest on Aug 21, 2024 12:11pm
Just curiuos if you know where those legal fees went, and wondering if Carolyn had any involvement?