Canada NewsWire
TORONTO, Nov. 4, 2016
- Concerned Shareholders are considering all options to stop oppressive and abusive conduct of Eco
Oro
TORONTO, Nov. 4, 2016 /CNW/ - The concerned shareholders
(the "Concerned Shareholders") of Eco Oro Minerals Corp. (TSX: EOM) ("Eco Oro"
or the "Company") wish to thank shareholders for the support they have shown in rejecting the Second Tranche common share
financing at yesterday's shareholders' meeting.
Although we are pleased with the result of yesterday's vote, we believe that our work to enhance the shareholder value of the
Company is far from complete. As a result, we have requested that the British Columbia Securities Commission
("BCSC") exercise its public interest discretion for the purpose of preventing the issuance of the secured contingent
value rights (the "CVR"), unless prior disinterested shareholder approval is obtained. The issuance of the CVRs and related
transactions contemplated under the investment agreement (the "Agreement") between the Company, Tenor Capital Management
Company, L.P. and others are coercive and abusive and would set an unacceptable precedent which, if followed, would bring the
capital markets into disrepute. We also believe that the actions of the Company and its directors have been oppressive and unfairly
prejudicial to the shareholders of the Company. We have reached this conclusion based on several factors, including the
following:
- The threat to proceed with the CVR in the event of rejection of the Second Tranche equity financing at the November 3 shareholders' meeting was an unprecedented and coercive action by the board which provided no
substantive choices to shareholders.
- It appears that the board of the Company has engaged in disclosure failures, most of which were addressed only after
regulatory intervention. However, further disclosure is required. Based on discussions between management and certain
shareholders, the Concerned Shareholders believe that certain key members of management are being compensated to ensure that they
stay with the Company to complete the arbitration against the government of Colombia. The
Agreement provides that a new management incentive plan will be put in place, which raises significant conflict issues. We have
asked that the BCSC require disclosure of the relevant details of the new management incentive plan.
- The process undertaken by the board of the Company to negotiate and approve the transactions under the Agreement appears to
have been flawed from the outset. We understand that the person that led both the effort to find funding for the arbitration, and
the negotiations with Tenor, was Anna Stylianides, the Executive Chairman of the Company, who is
also a participating shareholder entitled to receive CVRs. Further, the Concerned Shareholders believe that certain key members
of management are being compensated in a manner which may cause their allegiance to be tied to Tenor. The manner in which
insiders and other key shareholders as selected by management, to the exclusion of all other shareholders, were allowed to
participate in acquiring CVRs is deeply troubling.
- Based on information obtained by the Concerned Shareholders from various parties, the Concerned Shareholders believe that the
Company could have obtained offers to finance the arbitration which are materially superior to that offered by Tenor. This raises
further concerns as to whether the board of the Company properly considered financing alternatives in a manner which would serve
the best interests of the Company.
- The CVR, in effect, allows Tenor to have full control over the operations of the Company. An adverse deviation from the
approved budget of the Company, an unapproved change of control or the resignation, death or termination of a key member of
management on a basis not acceptable to Tenor would trigger an event of default under the terms of the CVR, which the Company
could not allow to occur. The Concerned Shareholders believe that upon an event of default under the CVR, the Company would owe
Tenor 51% of the amount of the claim in cash -- that is, 51% of the amount of the claim put forward by the Company as opposed to
the proceeds of a successful claim. In effect, the operations, management and control of the Company would be within the control
and direction of Tenor.
We are currently reviewing with our legal advisors all other options to hold the board and management responsible for the
oppressive and coercive steps they have taken for their benefit and the benefit of key insiders of the Company, including taking
steps to nullify and invalidate the Agreement and all CVRs.
SOURCE Concerned Shareholders of Eco Oro Minerals Corp.
