Criticizes Balda's Conflicted Supervisory Board for Using Disingenuous Arguments and Deceptive Tactics to Mislead Shareholders
Octavian Advisors LP ("Octavian"), which through various funds owns approximately 8.3% of the outstanding shares of Balda AG ("Balda"), today urged its fellow Balda shareholders to vote to replace the current conflicted Supervisory Board with Octavian's highly qualified independent nominees at the Extraordinary General Meeting to be held on February 8, 2012.
"We are honored by the support and positive feedback we have received from many of our fellow Balda shareholders," said Richard Hurowitz, Chairman and Chief Executive Officer of Octavian. "Their enthusiastic backing, combined with strong support from ISS and Glass Lewis, is powerful evidence that meaningful and immediate change is needed at Balda."
Igor Kuzniar, a Managing Director at Octavian, said, "Balda's current Supervisory Board suffers from a conflict of interest that has inflicted severe damage on the company and its shareholders. If elected to the Supervisory Board, Octavian's nominees will work diligently to unlock Balda's value and will always act in the long-term best interests of the company and all of its shareholders."
Octavian criticized the current Supervisory Board for employing deceptive tactics and inaccurate arguments in order to defend its questionable behavior and to mislead shareholders. Octavian noted the following in order to correct the record and provide its fellow Balda shareholders with accurate information:
- Octavian's overarching concern is the conflict of interest that motivates the current Supervisory Board to act on behalf of Michael Chiang instead of Balda and its shareholders.
- The Supervisory Board has admitted that two of its three members, Yu-Shen Kai and Chun-Chen Chen have close business relationships with Mr. Chiang, Balda's largest shareholder.
- Balda's assertion that Mr. Chiang and his wife Yun-Ling Chiang have distinct and separate investment and business interests simply defies logic and has been questioned publicly by two leading independent proxy advisory firms. It is troubling that Dr. Naschke, Chairman of the Supervisory Board, would endorse such an absurd argument in official communications with Balda shareholders, particularly since Balda has previously disclosed in audited financial statements that it considers Mr. Chiang or the Chiang family – and not Mrs. Chiang alone –to be the holder of the Balda stake.
- There was suspicious trading activity in the days leading up to the record date to be eligible to vote at the EGM. Approximately 9% of Blada's outstanding shares, were acquired by three unidentified private buyers in an aggressive fashion, driving up Balda's share price more than 15% during that period. Market reports in the German media indicate that all of these buyers were acting through the same bank and are represented at the EGM by the same law firm that represents Yield Return Investment's shares. Suspiciously, all of these buyers purchased shares in an amount that would keep their holding just below 3% and thus not trigger a filing requirement. We strongly believe this was an orchestrated attempt by Mr. Chiang – or individuals acting in concert with him – to manipulate the outcome of the shareholder vote and preserve the status quo. If true, this undisclosed activity would be in violation of the law, and Mr. Chiang would legally be required to forfeit his voting rights at the EGM, among other serious legal consequences. BaFin, Germany's financial services regulator, has said that it is currently investigating the matter.
- Dr. Naschke does not have the necessary independence to act in the best interests of Balda's shareholders. Dr. Naschke was originally nominated to the Supervisory Board by Yield Return Investments, the Chiang investment vehicle, and he has not been able to credibly demonstrate that he acts independently and without influence from the Chiang family.
- Contrary to the Supervisory Board's assertion, Octavian has no desire for Balda to dispose of its TPK stake in "a quick sale strategy." Rather, as we have clearly stated, Octavian is seeking to appoint an independent, conflict-free Supervisory Board to oversee the disposal of this non-core asset in a manner and at a time that would be most advantageous to the company and its shareholders.
- The Supervisory Board's assertion that Octavian or a group associated with us may try to purchase Balda's TPK stake at a discount to the market is false and absolutely unfounded. Octavian felt compelled to call an Extraordinary General Meeting because it saw no other alternatives to preserve the interests of the Company and all its shareholders.
- Contrary to what Balda's Supervisory Board has suggested, extension of the lock-up period in April 2011 for Balda's TPK stake was not inevitable. TPK had a range of options other than a convertible debt offering to raise financing for its capital investment program. Had Balda refused to extend the lock-up, TPK easily could have obtained alternative financing. This clearly demonstrates the Supervisory Board made a decision that benefitted Mr. Chiang and TPK, and was detrimental to Balda shareholders.
- To say that Balda's TPK shares were not sold after the lock-up period expired because it was "quite complex" is not a valid excuse. To sell the shares, Balda simply would have had to make certain filings – a standard procedural step in such cases. To blame paperwork for inaction is inexcusable and indicative of how far this Supervisory Board is willing to go to preserve its own positions.
- Chiang's past conduct makes Octavian seriously doubt his commitment to supporting the sale of Balda's TPK shares in a manner that maximizes value for the company and all its shareholders as opposed to just Mr. Chiang.
- Octavian has never refused to engage with the current Supervisory Board to discuss Balda and its business. In fact, Octavian always prefers to work constructively with a company's Board and management to seek positive change that benefits Octavian and its fellow shareholders. Octavian believes conflicts of interests render the current Supervisory Board unable to act independently and in the best interests of the company's shareholders.
In order to rectify the current situation at Balda and improve corporate governance at the company, Octavian is asking shareholders to replace the current Supervisory Board with three highly qualified and independent candidates – René Charles Jäggi (Nominated as Chairman), Behdad Alizadeh, and Igor Kuzniar – all of whom are firmly committed to protecting the best interests of all Balda shareholders.
Octavian urges its fellow shareholders to vote FOR Octavian's slate of directors at Balda's Extraordinary General Meeting on February 8, 2012 to ensure Balda has a Supervisory Board dedicated to maximizing value for all Balda shareholders.
Additional information regarding Octavian's proposed course of action and recommended nominees is available at www.ShareholdersForBalda.com.
About Octavian Advisors
Octavian Advisors, LP is a global investment firm with offices in New York and London. The firm focuses on special situations and distressed investments in international markets, and has successfully invested in over 40 countries on six continents. Octavian currently manages approximately $1 billion for leading endowments, foundations, pension funds, family offices and institutions.
Contacts:
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Cas Sydorowitz, +44 (0)870-703-0302
shareholderinfo@georgeson.com
or
For
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Lasse
Schmid, +49 89 599 458 142
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Nicholas
Wenzel, +89 599 458 115
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Sard Verbinnen & Co
Jonathan
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