One concerned shareholder of Gem International Resources Inc. is looking for a change in management, spurring a meeting early next month.
A group of concerned shareholders of Gem International Resources Inc. led by Mosman Oil & Gas Limited, “announce that on October 13, 2017 the concerned shareholder formally requisitioned a meeting of the shareholders of GEM” for February 9, according to a company press release.
The concerned shareholder owns approximately 9.6 million shares of Gem or approximately 17 per cent of the issued and outstanding shares. Other shareholders of GEM owning or exercising direction and control over an additional approximately 21 million shares or 36 per cent of the issued and outstanding shares have expressed similar concerns with management and have indicated support for the efforts of the concerned shareholder. According to publicly filed information, the current management of GEM only own in the aggregate just over 1 million shares or approximately 1.7% of the issued and outstanding shares of GEM.
The purpose of the requisitioned meeting is to remove from office all of the current directors of GEM and to replace them with three highly qualified nominees: Mr. John W. Barr, Mr. Michael Ballanger and Mr. Campbell Smyth. The concerned shareholder believes that the current board of directors and management of GEM have consistently failed to act in the best interests of the company and its shareholders. Now is the time for the company to have the management that is aligned with shareholders to ensure the preservation of value for its shareholders.
The concerned shareholder has attempted on numerous occasions to engage with the board of directors of Gem to discuss the resolution of its concerns. According to the Canadian Press/Marketwired story, the concerned shareholders send a letter to the board of directors of GEM on September 27, 2017 outlining various concerns regarding the management of GEM. The letter provided as follows:
“Current management has demonstrated a complete inability to execute on Gem’s arrangements in respect to the Dala project in Angola, what was the main and only prospective asset of the company. Moreover, and even more concerning, it the complete failure to keep shareholders and the market informed of material information regarding developments in the Dala Project transaction and the associated financing. It is apparent that the current management of GEM failed to raise and make the US$2.7 million payment required to be made by May 31, 2017, although there was no announcement of this material breach of the terms of the agreement. No meaningful information regarding the status of the agreement, progress on the funding required by May 31, 2017 or status of TSXV approval of the transaction was disclosed to shareholders or the public between the announcement of the amended terms of the transaction on January 24, 2017 until the announcement on July 13, 2017 that the transaction agreement had been terminated. Given the terms of the transaction, there was clearly material information in the interim period that was required to be publicly disclosed. The company repeatedly disclosed that it was close to obtaining the financing required to complete the Dala Project transaction but failed to make any disclosure when it became apparent that the financing was not forthcoming or at least that the ability of obtaining the financing was in question.
“After GEM lost the Dala project opportunity it has failed to provide any information to shareholders regarding the business plan of the company going forward. In addition to being required by applicable corporate and securities laws and the rules of the TSXV Venture Exchange, Shareholders of a publicly traded company such as GEM, have expectations when it comes to management, disclosure of material information and proper investor communication generally. Simply put, they expect to know how the companies they invest in are being managed. Indeed the company’s website is totally outdated and no shareholder communications have recently occurred.
‘Management has completely failed in its responsibilities to GEM, its stakeholders and to the public markets in Canada. Management has made repeated promises, including repeated unfounded, unrealistic or patently false representations about obtaining funding, that never materialized and that were not updated in a timely manner, if at all.
‘Mosman believes that the action or inaction of management clearly demonstrates that the situation must change immediately. Mosman has endeavoured several times to communicate with the board of directors of GEM but has failed to receive any response.
‘We request that management abide by its responsibility to act in the interests of the GEM and its shareholders and contact to the undersigned to discuss the changes to management required to move the company forward.
‘Until there is resolution regarding the management of the company, the board of directors of GEM should desist from any actions that would dilute existing shareholders and entrench current management.”
(Canadian Press/Marketwired)
