Concerned Shareholders release open letter to Synex International shareholders; caution against desperate, misleading claims by Synex Special Committee

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Concerned Shareholders release open letter to Synex International shareholders; caution against desperate, misleading claims by Synex Special Committee

Canada NewsWire

Urges shareholders to vote their BLUE proxy in favour of five new and experienced nominees to replace entrenched incumbent directors, who have resorted to mudslinging tactics

VANCOUVER, Oct. 12, 2017 /CNW/ - Daniel Russell, a director and the single largest shareholder of Synex International Inc. (TSX:SXI) ("Synex" or the "Company"), along with other Concerned Shareholders today released an open letter to Synex shareholders warning them of the latest innuendo and misleading tactics used by the Special Committee of Synex to induce fear among shareholders. The letter addresses and sets the record straight regarding several matters pertaining to Mr. Russell and the Concerned Shareholders' slate and thanks all shareholders for their continued support and input leading up to the meeting date.

It is time to put shareholders first and to let them decide for themselves the future of the Company. A vote for management is a vote for continued underperformance and corresponding undervaluation of Synex stock. Shareholders should keep asking two simple questions:

  1. if they knew what to do, why haven't they done it? and
  2. if any of their claims were true, wouldn't the stock be trading at a multiple and not a discount to its true value?


Plans are only as good as those who execute them and the Concerned Shareholders' nominees have the passion and talent to turn Synex around. A vote with the Concerned Shareholders is a vote for a new approach focused on you, the shareholder, and the profitable, professional management of the Company.

Shareholders are urged to read the circular of Daniel Russell (the "Circular")  and vote their BLUE proxy or voting instruction form by 5:00 p.m. (PDT) on October 31, 2017. Shareholders with questions about voting their shares should call Kingsdale Advisors at 1-866-581-0507 or 1-416-867-2272 outside of North America or email [email protected]. A copy of the Circular is also available on Synex's SEDAR profile at

Full text of the letter below:

Dear Fellow Shareholders,

Some of you may have seen a press release issued by the Special Committee of Synex defending their stagnant strategy and their choice to push on with the status quo. Its artful use of innuendo seems to be intended to make you afraid of me and other like-minded shareholders and our call for positive change.  Frankly, you should be afraid.  You should be afraid to let current management, overseen by the current board, continue to manage your investment.  No amount of fear mongering should obscure the stark facts:

  • your investment has performed abysmally,
  • your dividends have been suspended,
  • costs have bloated, and
  • despite 25 years at the helm and $33MM in assets, the President has only three power plant assets under the Company's control.


No wonder the incumbents want to deflect attention.

Over the last few days, I have had the privilege of speaking with many of my fellow shareholders and I hope to speak to many more in the coming days.  I have been overwhelmed with support and grateful to have received your input.  So far, shareholders representing over 46% of the issued and outstanding shares have expressed support for our approach as the need for a new strategy has been significant. Every shareholder I spoke with has shared their views on why they invested in Synex and their frustration with the current leadership's inability to unlock the value they still ascribe to Synex.  All have been frustrated at the constant dilution of their investment with each successive equity financing with frankly nothing to show for it.

The Special Committee has made a desperate attempt to distract you with speculation and innuendo.  I was disappointed to see the resignation of Paul O'Sullivan from the Committee but understand his desire to distance himself from their attempts at mud-slinging.  However, I do want to address my fellow shareholders and set the record straight on several matters:

  • Management notes that McKelvie and Newcastle projects have water licenses and land tenure in place, implying that the projects are in good shape. Shareholders know that McKelvie has been in development for 15 years with no end in sight, but the real issue is that BC Hydro has suspended taking applications under the Standing Offer Program and there is a real risk that no Electricity Purchase Agreement will be entered into. BC Hydro's own web site clearly states: "BC Hydro is reminding applicants that spending during this existing Program uncertainty is at the applicant's own risk." This is the sort of issue the President should know and be dealing with.
  • While it is true, that in respect to the Victoria Lake Hydro Project, the Company does not expect to invest additional cash, as shareholders understand, when third parties pay for development, our resulting economic interests become insignificant.
  • Basic business fundamentals suggest that careful cost control to improve cashflow is prudent. Two major strategic drivers – 1) the lack of grasp for our current strategic needs by current management with regards to the suspension of the BC Hydro Standing Offer Program, and 2) the indifference with which breaching our credit covenants has been treated by the incumbents – make it imperative and the Concerned Shareholders will deliver on it.
  • The Special Committee states that I have "consistently impeded the growth of Synex". The truth is, I have participated in every round of financing over the last few years. When asked to put up further money recently, I asked for some basic business disciplines – like an accounting of where the money has been spent. As shareholders, you should be demanding the same, and the Concerned Shareholders will deliver that to you. I will gladly invest further in Synex but not while the wasteful and value-destroying management approach is in place.
  • The management team would have you believe that I have some hidden motive to take over the Company for personal reasons and have subtly hinted that I want a lucrative President's salary. Nothing could be further from the truth. I tried the path of reasonable negotiation and consistently offered to work with the incumbent team. However, when a management team, and the board that oversees it, is so out of touch with business realities and shareholder interests, there is no "tweaking" that works; there needs to be a replacement of the old, tired, failed ways with fresh, sound ones. The Concerned Shareholders have put forward a world-class, independent slate focused on one thing – overseeing the turnaround of Synex. I do not seek a President's job and benefits; I seek a Synex that delivers on its true intrinsic value. I do not want to increase expenses, I want to reduce wasted money and see it put to work for shareholders.
  • It has been suggested that the Concerned Shareholders' slate is not independent and somehow beholden to me. The truth of the matter is, Synex needs independent thinking and a critical review – which is exactly what these world-class nominees will bring to the table. None of them needs to commit their valuable time and talent to take on a turnaround situation like Synex, but have willingly chosen to do so because that is their passion and talent. Our slate will bring the fresh thinking and critical analysis to the issues the board has not addressed for too long. Contrast this to a board handpicked by an entrenched President and draw your own conclusions on which slate is independent; which slate is looking out for your best interests.


In the coming weeks, you can expect the current leadership team to repeat their innuendo as they have nothing else with which to work.  You can expect them to claim they have great plans for the Company.  They will talk about new board committees and will try and convince you they have some secret sauce of local wisdom that is critical to the Company.  As shareholders, keep asking yourself two simple questions:

  1. if they knew what to do, why haven't they done it? and
  2. if any of their claims were true wouldn't your stock be trading at a multiple and not a discount to its true value? 


Plans are only good if they are properly executed. The President's poor record of execution speaks for itself and nothing can hide the incumbents' track record.

Contrary to what was stated by the Special Committee, I am a "boots on the ground" manager, my office is in the field where operations are executed, I have long held operations in BC and know the environment well. Likewise, the board slate I have assembled is personally committed to asking the tough questions, challenging the status quo and looking for every opportunity to unlock the tremendous potential that Synex represents.

The changes we plan are basic good business disciplines for a company our size facing strategic headwinds. Your choice at this shareholder's meeting is a simple one.  A vote for management is a vote for the same old playbook that has seen your investment suffer so badly.  A vote on the BLUE proxy is a vote for much needed change. 


Daniel Russell

Director & Shareholder, Synex International Inc.

Daniel Russell has retained Dentons Canada LLP as legal counsel, and Kingsdale Advisors as his strategic shareholder advisor and proxy solicitation agent.

This press release contains forward-looking statements. All statements 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 the Concerned Shareholders 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. The Concerned Shareholders do not assume any obligation to update any forward-looking statements contained in this press release, except as required by applicable law. Please refer to the Circular for further information regarding the risks of these statements.

Except where otherwise stated herein, the statements contained in this press release are not made by or on behalf of the management of the Company but are made by or on behalf of the Concerned Shareholders. 

A copy of this press release may be obtained on the Company's SEDAR profile at

SOURCE Daniel Russell

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