TORONTO, ON / ACCESSWIRE / April 8, 2020 / Dealnet Capital Corp. ("Dealnet" or the "Company") (TSXV:DLS) believes that shareholders should be aware of the full context surrounding the action being taken by a group of dissident shareholders, led by former Dealnet Executive Chairman and current Capital Partners CEO, Dr. Steven Small ("Small"). Accordingly, the Company has provided the following summary of material details about Small omitted by the Small Dissident Group in its recent announcement:
- The Small Dissident Group failed to disclose that Small was terminated for cause by Dealnet's Board on April 8, 2018.
- Small has sued Dealnet for wrongful dismissal and is seeking damages from the Company of
$16 million. - As outlined in the pleadings filed in this lawsuit, Dealnet alleges that Small's termination followed careful investigation and deliberation by the Board. Small was provided with opportunities to respond in detail, but declined to do so. As pleaded in the outstanding action, the Board's investigation resulted in the discovery of misconduct including:
- Actively competing with Dealnet;
- Engaging in self-dealing and self-interest;
- Engaging in actual and potential conflicts of interest;
- Using Dealnet's resources for his personal use;
- Engaging in acts of dishonesty; and
- Failing to disclose relevant information to Dealnet.
- In its Statement of Defence, Dealnet alleges that "[During his tenure at Dealnet, Small engaged in] a pattern of manipulation, self-interest, self-dealing, dishonesty, discreditable conduct and conflicts of interest". Shareholders are urged to review Dealnet's Statement of Defence and other related legal documents at https://www.dealnetcapital.com/additional-info/.
- Small has advised Dealnet that he believes that his claim against Dealnet is strong and in the event that he and the Small Dissidents are elected to the Board, Small intends to engage Dealnet with the goal of reaching a settlement. It is management's view that this could have a detrimental impact on the Company and its shareholders.
In 2017, the last full year Small was Dealnet's Chairman, Company losses were $44.7 million. The new leadership team reduced net losses to $8.8 million in 2018 and further reduced losses by over 80% to $1.8 million in 2019. The decisive operating turnaround and war chest of Contractual Residual Cash Flow of $75 million, along with the rights to End of Term payments on approximately 16,000 leases, are evidence of an organization that is focused on delivering future value to all shareholders.
Dealnet has concerns about the omissions contained in Small's disclosure material in his attempt to take 100% control of the Board of Directors. The Company also believes that this takeover attempt is a distraction and that it is in Dealnet's best interests and that of its shareholders, for management and the Board to focus 100% of their time and cash resources towards value creation.
The Company has delayed its 2020 annual general meeting given the rapidly evolving COVID-19 pandemic. Dealnet's first priority continues to be the safety and well-being of its employees and shareholders and ensuring Dealnet's business continuity plans are carefully executed. The Company will update shareholders on the timing of its 2020 annual general meeting in due course.
About Dealnet Capital Corp.
Dealnet is the parent company of subsidiaries operating in two market segments, consumer finance and call centre. The Company operates in the consumer finance segment in Canada through EcoHome Financial Inc. ("EcoHome") and its call centre segment under the One Contact banner ("One Contact").
EcoHome is a specialty finance company serving the $20 billion Canadian home improvement finance market. EcoHome develops and supports consumer sales financing programs for approved dealers and distributors under agreements with original equipment manufacturers (OEMs) that supply a wide range of home improvement products to the retail market. Through a dealer network, EcoHome underwrites, originates, funds and services the prime quality loans and leases that homeowners need to finance the acquisition and installation of capital assets that improve the quality, comfort and safety of their homes.
One Contact offers customer support services to third-party institutions across Canada and the U.S. and to EcoHome.
For additional information please visit www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-looking Statements
This news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the information is provided and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. For a description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's Management's Discussion and Analysis. The Company undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on forward-looking information.
Contact Information
Brent Houlden | Michael Koshan |
SOURCE: Dealnet Capital Corp.
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