EnerCare Sets the Record Straight: Octavian is Misleading You to Seize Control of Your Company; Vote Your Blue Proxy to Protect Your Investment
TORONTO, ONTARIO -- (Marketwire) -- 04/05/12 --
EnerCare Inc. ("EnerCare") (TSX: ECI) today responded to the proxy circular issued on April 3, 2012 by New York-based hedge fund manager Octavian Advisors, LP ("Octavian"), which is attempting to stack EnerCare's board with four of its own hand-picked nominees.
EnerCare continues to deliver strong financial and operational results, achieving solid business performance that reflects the fundamental strength of the company and enhances its potential for future growth over the long term.
The current board of EnerCare has significantly grown shareholder value: a $100 investment in EnerCare two years ago is worth approximately $228.86 today.(1)
Unfortunately, at the same time, Octavian is engaging in a strategy of disrupting EnerCare's board and misleading shareholders while pursuing its own self-interest in forcing a quick sale of EnerCare.
-- EnerCare continues to deliver dividends and steady growth for
-- Octavian misleads in its quest to seize control of the company.
-- Octavian is seeking to stack EnerCare's board with its own hand-picked
nominees and force a quick sale.
-- Shareholders should vote the BLUE proxy to protect their investment.
Octavian continues to mislead shareholders in its effort to seize control.
Share value - Assuming the reinvestment of dividends over the period from the IPO in 2002 to December 9, 2011, EnerCare returned an increase in value to shareholders of 118%, significantly better than the 78% increase for the S&P/TSX Composite Index. Yet, Octavian disregards dividends, and misleads shareholders by stating that "the stock was down 11%" in the same period. EnerCare paid shareholders cumulative dividends of $9.31 per share over the period during which Octavian incorrectly implies that shareholders suffered a loss.
Octavian's discussions with EnerCare - Despite Octavian's misleading allegations, EnerCare attempted to work constructively with Octavian in countless letters, discussions and meetings over the course of two years. EnerCare offered to address any legitimate concerns raised by Octavian. EnerCare's board offered to meet with Octavian in early November 2011, and, on November 9, 2011, even went so far as to offer Octavian the opportunity to propose nominees for consideration to fill a seat on its board. Yet, Octavian rejected that offer, refused to submit qualified nominees and, on December 1, 2011, notified
EnerCare that it would not engage in the director selection process. On December 12, 2011, Octavian made its first (invalid) attempt to force an increase in the size of EnerCare's board, which has led to today's effort to stack the board with four of its own hand-picked nominees.
(1) Calculated as of March 23, 2012 and assumes dividend reinvestment on a non-taxable basis at each monthly payment date.
Renewal of EnerCare's board - Octavian has mischaracterized EnerCare's efforts at renewal of its board of directors. Well before Octavian demanded a meeting of shareholders, EnerCare had initiated a process to recruit directors with a broad range of skills and experience. EnerCare twice offered Octavian an opportunity to participate in this renewal process, but these offers were rejected out of hand.
In addition to the director selected through this process, another director was added to the Board when Direct Energy exercised its long-standing contractual rights to nominate one director of EnerCare. These and the existing experienced directors of EnerCare will enable it to continue a strategy of protecting monthly dividends for shareholders and achieving steady growth.
Sub-metering - Octavian misleads shareholders, criticizing EnerCare for regulatory developments beyond its control and not foreseen by any of the numerous sub-metering participants. Yet, Octavian fails to note that EnerCare's foresight in developing a sub- metering expertise and business in 2009 positioned it to take advantage of opportunities created with the regulatory certainty that soon followed, and which has provided EnerCare with a broader range of customers with diverse energy needs and the opportunity to provide those customers with an array of energy-efficient products and services. With EnerCare's acquisition of Enbridge Electric Connections Inc. (now EnerCare Connections Inc.) in October 2010, EnerCare became the largest non-utility provider of sub-metering services in Canada.
Shareholder representation - EnerCare fully appreciates representation by shareholders on its board. However, Octavian's effort to obtain a grossly disproportionate 40% board representation for its 13% shareholding is inconsistent with fair representation for all shareholders and is unanimously opposed by EnerCare's independent directors. EnerCare's directors represent all shareholders, not a single shareholder.
Misleading proxy - Octavian's proxy circular and form of proxy are inconsistent with the resolution it requisitioned. Octavian requisitioned a resolution to expand the EnerCare board to ten directors to accommodate four of its own hand-picked directors, and EnerCare is complying with its obligation to put the requisitioned resolution to shareholders at the meeting. Yet, in its circular, Octavian now also demands the removal of two experienced and independent directors of EnerCare - directors who are shareholders themselves and who have helped create value by pursuing a strategy to protect monthly dividends and achieve steady growth.
Inaccurate comparison - Octavian compares EnerCare to the sale of UE Waterheater Income Fund. However, Octavian neglects to point out that UE Waterheater Income Fund had an entirely different business model than EnerCare. This just demonstrates that Octavian lacks any understanding of EnerCare's business and that Octavian has no plan for EnerCare other than a quick sale of the company.
Share offering - Octavian criticizes EnerCare for its 2010 share offering. That offering was a direct result of EnerCare's commitment to prudent management to prevent further disruption to its business during challenging macroeconomic conditions. Through a combination of equity and debt, EnerCare was able to raise approximately $53 million in a challenging market. EnerCare used the proceeds of the offering for, among other things, the Enbridge Electric Connections Inc. acquisition in order to maximize shareholder value.
Octavian's objective is a quick sale of the company, at any price. Octavian has no plan for EnerCare other than its quick sale.
Sale of the company - EnerCare's board and management are willing to sell the company, but only at a price that reflects EnerCare's true value and that makes sense for all shareholders. Octavian, on the other hand, is willing to sell at any price in order to unload its shares. In May 2010, Octavian made it clear in a meeting with EnerCare's Chair of the Board that it wanted EnerCare's board to sell EnerCare at $6.00 per share. Then, in November 2010, Octavian locked up to Macquarie's offer to buy EnerCare at $6.45 per share, which
Octavian failed to disclose in its proxy circular.
EnerCare's share price as of March 23, 2012 was $9.91, which clearly demonstrates that the board and management of EnerCare were correct in refusing Octavian's demands. By following a strategy of growth, EnerCare has allowed shareholders to realize a further $3.46 in share price appreciation and $0.87 per share in dividends (as of March 23, 2012), or approximately 72% in total return(2), something that would have been denied by Octavian.
Octavian has no plan for EnerCare - In an effort to engage Octavian constructively, EnerCare, in a letter dated June 22, 2010, invited Octavian to present its views on ways to unlock shareholder value in writing for consideration by EnerCare's board. Octavian did not present any constructive plan then and still has not presented any constructive plan for EnerCare. This leads EnerCare's board to believe that Octavian has no plan for EnerCare other than a quick sale of the company.
Octavian has intentionally tried to disrupt EnerCare's strategy of protecting monthly dividends and providing steady growth.
Removal of experienced directors - Octavian demands the removal of two experienced, independent EnerCare directors, including Jim Pantelidis, the Chair of the Board, due to losses incurred during the most drastic economic downturn in the North American economy since the Great Depression, from 2008 to 2009. By Octavian's reasoning, virtually all boards of all North American companies should be forced to resign.
The same directors that Octavian wants removed helped deliver increased value and dividends to shareholders by pursuing a strategy to protect monthly dividends and achieve steady growth.
Furthermore, Octavian has demanded that Mr. Pantelidis not act as chairman during the upcoming meeting of shareholders. Mr. Pantelidis is an independent director who continues to have the full confidence of the Board.
PROTECT YOUR DIVIDEND - VOTE YOUR BLUE PROXY TODAY
Shareholders should call Kingsdale Shareholder Services toll-free at 1-888-518-6813 or call collect at 416-867-2272 for assistance in voting the BLUE proxy.
For more information, please go to: www.ProtectEnerCare.com.
(2) Assumes dividend reinvestment on a non-taxable basis at each monthly payment date.
About EnerCare Inc.
EnerCare owns a portfolio of approximately 1.2 million installed water heaters and other assets, rented primarily to residential customers in Ontario. EnerCare also owns EnerCare Connections Inc., a leading sub-metering company, with metering contracts for condominium and apartment suites in Ontario, Alberta and elsewhere in Canada.
For more information about the upcoming April 30 annual and special meeting of shareholders, please visit www.protectenercare.com. You can also find more information about EnerCare on SEDAR at www.sedar.com, on our investor website at www.enercareinc.com or on our rentals and sub-metering business website at www.enercare.ca.
This news release contains certain forward-looking statements that involve various risks and uncertainties. The forward-looking information in this news release includes statements that reflect management's expectation regarding EnerCare's growth, results of operations, performance, business prospects and opportunities. Such forward-looking information reflects management's current beliefs and is based on information available to them and/or assumptions management believes are reasonable. Many factors could cause results to differ materially from the results discussed in the forward-looking information. Although the forward-looking information is based on what management believes to be reasonable assumptions, EnerCare cannot assure investors that actual results will be consistent with this
forward-looking information. All forward-looking information in this news release is made as of the date hereof. Except as required by applicable securities laws, EnerCare does not intend and does not assume any obligations to update or revise the forward-looking information, whether as a result of new information, future events or otherwise. A thorough discussion in respect of the material risks relating to the business and structure of EnerCare can be found in its current Annual Information Form, which is available on SEDAR at www.sedar.com.
Source: EnerCare Inc.
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