Expresses Concerns with Current Board’s Lack of Capital Markets Knowledge
Urges Board to Accept Meeting Date Proposal and Promptly Hold Annual Meeting
Voss Capital, LLC, together with its affiliates (“Voss”, “we” or “our”), the largest shareholder of Thunderbird Entertainment Group Inc. (CVE: TBRD) (“Thunderbird” or the “Company”) today issued the below public letter to Thunderbird shareholders.
Dear Fellow Thunderbird Shareholders,
Voss has been a shareholder of Thunderbird for over two years and currently beneficially owns approximately 13.3% of the Company’s outstanding shares. Like many of you, we have been unsatisfied with the Company’s stock performance given its solid operational results. While we have made an effort to communicate productively with the Company, we have been hindered by Thunderbird’s board of directors’ (the “Board”) unwillingness to do the same. Since submitting our nomination notice on November 4, 2022 (the “Nomination Notice”), we have made several attempts to initiate a constructive dialogue with the Board, including the submission of a reasonable proposal to set the date of the Company’s 2022 annual general and special meeting of shareholders (the “2022 Annual Meeting”) for December 28, 2022 (the “Voss Proposal”). Instead of substantively responding to our outreach, the Board has chosen to make multiple misleading and factually incorrect statements regarding our campaign. We wish to set the record straight.
Thunderbird Claim: “Voss has opted to initiate an ambush proxy fight”
Our director nomination was far from an ambush. After engaging with multiple members of the Board over the past several months, we delivered a letter to the Board outlining our concerns. The Board failed to respond or even acknowledge the letter until nearly three weeks later, and only after a follow up email from our team. Furthermore, we sought to minimize the initial public announcement of our Nomination Notice as a courtesy to the Company and in the hope that the Company would take us up on our offer to work collaboratively rather than undergo the “cost, expense and distraction” of a proxy campaign.
As we describe below, we have tried to constructively support Thunderbird since we made our initial investment. The Board’s claim that it was “ambushed” or surprised by our nomination suggests to us that it is not only uninformed as to the Company’s nomination procedures but also sorely out of touch with the Company’s shareholders. Since “the Board and management regularly and extensively engage with shareholders,” the Board should be well aware of the deep dissatisfaction of Thunderbird’s shareholders.
We would remind the Company of the disclosure made in Thunderbird’s Information Circular dated November 1, 2016:
“Purpose of the Advance Notice Provisions
The purpose of the Advance Notice Provisions is to provide Shareholders, directors and management of the Company with direction on the procedure for Shareholder nomination of directors. The Advance Notice Provisions are the framework pursuant to which the Company fixes a deadline by which holders of record of Common Shares must submit director nomination to the Company prior to any annual or special meeting of Shareholders and set forth the information that a Shareholder must include in the notice to the Company for the nomination notice to be in proper written form.”
We fail to understand how the delivery of our Nomination Notice in compliance with the Company’s advance notice provisions could constitute an “ambush.”
Thunderbird Claim: “Thunderbird is executing on its strategic plan and is creating long-term value.”
We have seen no evidence that the Board has an actionable plan to create value and we invite it to clarify the details, as well as, how this plan will result in value for shareholders going forward. The Company’s stock price is down over 40% from its high in April 2021 with the 30-day average trading volume down over 80% during that time frame. We have also lost faith in the Board’s investor relations strategy. Using yesterday as an example, on the day the Company announced favorable earnings, only 500 shares of Thunderbird stock traded in the market. It is easy to understand why we and other shareholders are dissatisfied with this performance.
Thunderbird Claim: “Voss is mistaken in its assertion that it can unlock value for Thunderbird shareholders simply by putting up a ‘for sale’ sign.”
We strongly disagree. Thunderbird’s management and Board members have frequently cited Entertainment One Ltd. (“eOne”) as a model of the ideal trajectory for the Company. Just yesterday, eOne announced that it is formally exploring a sale process due to a wave of unsolicited inbound interest from potential buyers. This announcement is just the latest example amongst dozens of Thunderbird’s peers who are properly recognizing and taking advantage of the current industry environment.
We would also note that over the course of our investment in the Company, we have suggested a range of value-enhancing strategies and tactics, all of which have gone unheeded. Voss believes that the Board does not appear to understand or take seriously its responsibilities to manage a public company. Our experience of trying to collaborate with the Board has led us to conclude that a refresh of the Board and a more comprehensive strategic review is now the best path forward for the Company and its stakeholders.
Thunderbird Claim: “Voss is attempting to take over the Company without paying a premium”
This statement reveals a shocking ignorance of capital markets and is factually inaccurate. An election of new directors does not represent a financial transaction, nor does it result in a change in the ownership of the Company. We hope the Board understands that directors don’t own the company outright, but rather they serve to represent all shareholders: the actual owners of the company. We are seeking to refresh the Board with new independent directors – if elected, our nominees will act in accordance with their fiduciary duties as directors and will not be beholden to Voss. With one exception, all of our nominees are wholly independent of Voss. This claim is a typical response by a board of directors that is facing scrutiny from its shareholders and is a throw-away line to distract from the serious issues at hand.
Furthermore, if the Board had promptly responded to our offers to discuss, they would be well aware that we are not, in fact, seeking to replace the entire Board. These statements display a disturbing lack of understanding of the Company’s corporate governance: shareholders approve the size of the Board at each annual meeting. As our circular has made clear – the size of our final slate is dependent on the ultimate size of the Board. Recognizing that the Company may increase the number of directors serving on the Board, we nominated six candidates in order to preserve our rights as shareholders.
Thunderbird Claim: “Voss’s nominees are ill-equipped to run a qualified or thorough strategic review process.”
Our nominees for election to the Board have specific media industry, M&A and capital markets experience that more than equips them to successfully execute a value-accretive strategic review of alternatives for the Company. In fact, we conducted an extensive search process, at our own expense, to carefully select each candidate specifically based on how their qualifications would help drive a successful review of alternatives and enable them to negotiate a transaction for Thunderbird. Unfortunately, this cannot be said of the existing Board – many of whom appear to have been chosen more for their personal relationships with other Board members rather than their qualifications or skill sets.
Take, for example, Marni Weishofer’s tenure as CFO of Lions Gate Entertainment Corporation (“Lionsgate”) 20 years ago. After a detailed review of Lionsgate’s track record under her tenure, we believe she has more experience with value destruction rather than value creation. Lionsgate’s abysmal attempt at dealmaking resulted in steady losses and large write downs of acquired production studios. We can’t help but be concerned that Mrs. Weishofer is now attempting to lead a similar acquisition strategy today at Thunderbird. Lionsgate’s significant losses accumulated under her leadership, totaling a nearly $145 million loss in operating cash flow from 1999 to 2002, all while Lionsgate’s bank loans ballooned from $8 million to $144 million. Lionsgate was not able to course correct until after Mrs. Weishofer left the CFO role.
The Board has had more than enough time to prove that it can create value at Thunderbird, and it has failed to do so. Although we had hoped to work constructively with the Board, it has become clear to us that fresh perspectives and skills are needed to elevate Thunderbird and to guide the Company into its next chapter.
Thunderbird Claim: “That calculated tactic left the Company with no choice but to defer the Meeting, which was originally scheduled for December 6, 2022.”
The Nomination Notice was delivered in compliance with the advance notice provisions of the Company’s articles (the “Articles”), the timeframe specifically set by the Company to provide it with adequate notice of any nominations or shareholder matters to be heard at an annual meeting. We strongly believe that the Company’s decision to postpone the 2022 Annual Meeting, is an attempt to impede shareholders’ right to vote for change, and bypass applicable corporate legislation and the Company’s own Articles. As detailed below, we submitted the Voss Proposal to Thunderbird on Tuesday, November 15, 2022, offering an agreement to schedule the 2022 Annual Meeting on December 28th, 2022, which we believe gives the Company more than enough time to scrutinize our candidates and complete its preparations for the 2022 Annual Meeting.
Simply put: Voss has respected the framework for nominating directors for election at the 2022 Meeting, the Board is bound to respect that framework as well.
The Postponement of the 2022 Annual Meeting and Voss’s Proposal to the Company
Voss strongly believes that the postponement of the 2022 Annual Meeting is unjustified and an attempt to impede shareholders’ right to vote for their representatives on the Board. The Business Corporations Act (British Columbia) (the “BCBCA”) and the Articles require that Thunderbird hold its 2022 Annual Meeting in calendar year 2022. Despite these requirements, the Company has applied to the British Columbia Registrar of Companies to postpone the 2022 Annual Meeting, potentially until March 6, 2023. The postponement of the 2022 Annual Meeting occurred just one business day after Voss, in compliance with the Articles, delivered notice to the Company of its nomination of Heather Conway, Asha Daniere, Peggy Hwan Hebard, Taylor Henderson, Mark Trachuk and Shannon Valliant (collectively, the “Voss Nominees”) for election as directors at the 2022 Annual Meeting. Notably, the Company admitted in its November 7, 2022 announcement that the postponement was directly related to its receipt of Voss’s nominations, despite the Nomination Notice being delivered in accordance with the advance notice provisions of the Articles.
On November 15, 2022, Voss delivered the following the Voss Proposal in an attempt to reach a mutually agreeable resolution on the scheduling of the 2022 Annual Meeting. Under the Voss Proposal, the 2022 Annual Meeting:
- Would be scheduled for December 28, 2022;
- Would be a combination in person and virtual meeting, as is appropriate for a contested shareholder meeting; and
- Would retain October 28, 2022 as the record date, as was originally set when the 2022 Annual Meeting was to be held on December 6, 2002.
Voss strongly believes that the Voss Proposal is balanced, fair and in the best interests of the Company and its stakeholders. Importantly, the Voss Proposal is in compliance with the BCBCA and the Articles and leaves more than sufficient time for the Company to prepare for and comply with the practical aspects of holding the 2022 Annual Meeting, including the preparation of the required notice, information circular and management proxy and the delivery of this material to shareholders within the time frames required under applicable law. Further, the Voss Proposal also allows shareholders to exercise their franchise rights in the time period required by the BCBCA and the Articles.
The Voss Proposal is a constructive attempt to allow shareholders to elect the Board in a timely manner, consistent with expectations for a Canadian public company.
Our singular objective for Thunderbird is to help ensure that necessary changes are made to put the Company on the right path towards unlocking its full potential and creating value for all stakeholders. As it stands now, the Board is insular – without proper oversight or accountability – which we believe our highly qualified director candidates would rectify. We continue to garner significant shareholder support for the Voss Nominees and welcome the opportunity to discuss our candidates with shareholders and the Board in a collaborative manner.
Sincerely,
Travis Cocke
Chief Investment Officer
Voss Capital
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward‐looking statements. All statements contained in this filing that are not clearly historical in nature or that necessarily depend on future events are forward‐looking, and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward‐looking statements. These statements are based on current expectations of Voss and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict, and are based upon assumptions as to future events that may not prove to be accurate. Voss does not assume any obligation to update any forward‐looking statements contained in this press release.
Additional Information:
On November 7, 2022, Thunderbird announced that it would be postponing the 2022 Annual Meeting previously scheduled for December 6, 2022 and that it would hold the 2022 Annual Meeting no later than March 6, 2023. The Voss Nominees will be considered for election at the 2022 Annual Meeting. Depending on the total number of directors eligible for election at the 2022 Annual Meeting, we reserve the right to withdraw, not withdraw or nominate additional candidates to the Board, subject to the Company’s governing documents and applicable law. Prior to the meeting, Voss expects to furnish an updated proxy circular to shareholders of Thunderbird, together with an updated WHITE proxy card. SHAREHOLDERS OF THUNDERBIRD ARE URGED TO READ THE PROXY CIRCULAR CAREFULLY BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and shareholders will be able to obtain free copies of the proxy circular and any amendments or supplements thereto and further proxy circulars at no charge on SEDAR at http://www.sedar.com. In addition, shareholders will also be able to obtain free copies of the proxy circular and other relevant documents by calling Voss’s proxy solicitor, Carson Proxy Advisors Ltd. (“Carson”), at at 1-800-530-5189, local (collect outside North America): 416-751-2066 or by email at info@carsonproxy.com.
Information in Support of Public Broadcast Solicitation
Voss is relying on the exemption under section 9.2(4) of National Instrument 51‐102 ‐ Continuous Disclosure Obligations (“NI 51-102”) 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 Voss and not by or on behalf of the management of Thunderbird.
Founded in 2011, Voss Capital, LLC is a fundamental research-driven, bottom-up, value-oriented manager focused on underfollowed special situations. The principal address of Voss is 3773 Richmond Avenue, Suite 500 Houston, Texas 77046.
The address of Thunderbird is 123 W7th Ave Vancouver, BC, V5Y 1L8, Canada.
Voss has filed an information circular (the “Voss Circular”) containing the information required by NI 51-102 in respect of its proposed nominees. The Voss Circular is available on Thunderbird’s company profile on SEDAR at http://www.sedar.com.
Proxies for the 2022 Annual Meeting may be solicited by mail, telephone, facsimile, email or other electronic means as well as by newspaper or other media advertising and in person by managers, directors, officers and employees of Voss who will not be specifically remunerated therefor. In addition, Voss may solicit proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws, conveyed by way of public broadcast, including press release, speech or publication, and by any other manner permitted under applicable Canadian laws. Voss may engage the services of one or more agents and authorize other persons to assist it in soliciting proxies on behalf of Voss.
Voss has entered into an agreement with Carson pursuant to which Carson will act as Voss’s proxy solicitation agent. Carson has been paid a retainer and will be paid fees at an hourly rate for services provided under the agreement. Fees will be limited to $175,000, unless otherwise authorized by Voss. Fees payable under the agreement will be adjusted as follows: (i) if there is a successful outcome, Voss will pay Carson’s fees plus a premium equal to 100% of all fees payable; (ii) if there is not a successful outcome, a 50% discount will be applied to all fees.
All costs incurred for the solicitation will be borne by Voss.
A registered holder of common shares of Thunderbird that gives a proxy may revoke it: (a) by completing and signing a valid proxy bearing a later date and returning it in accordance with the instructions contained in the form of proxy to be provided by Voss, or as otherwise provided in the Voss Circular, as updated and made available to shareholders; (b) by depositing an instrument in writing executed by the shareholder or by the shareholder's attorney authorized in writing, as the case may be: (i) at the Company’s registrar and transfer agent at any time up to and including the last business day preceding the day of the 2022 Annual Meeting or any adjournment or postponement of the meeting is to be held, or (ii) with the chairman of the 2022 Annual Meeting prior to its commencement on the day of the meeting or any adjournment or postponement of the meeting; or (c) in any other manner permitted by law.
A non‐registered holder of common shares of Thunderbird will be entitled to revoke a form of proxy or voting instruction form given to an intermediary at any time by written notice to the intermediary in accordance with the instructions given to the non-registered holder by its intermediary. It should be noted that revocation of proxies or voting instructions by a non‐registered holder can take several days or even longer to complete and, accordingly, any such revocation should be completed well in advance of the deadline prescribed in the form of proxy or voting instruction form to ensure it is given effect in respect of the meeting.
Other than disclosed herein, in the Voss Circular or Thunderbird’s public filings, neither Voss nor any of its directors or officers, or any associates or affiliates of the foregoing, nor any of Voss’s Nominees, or their respective associates or affiliates, has: (i) any material interest, direct or indirect, in any transaction since the beginning of Thunderbird’s most recently completed financial year or in any proposed transaction that has materially affected or would materially affect Thunderbird or any of its subsidiaries; or (ii) any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter currently known to be acted on at the upcoming 2022 Annual Meeting, other than the election of directors.
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Contacts
Serena Koontz
Head of Investor Relations
Voss Capital, LLC
serena@vosscap.com
