Riot Requisitions Special Meeting of Bitfarms Shareholders and Nominates Three Highly Qualified, Independent Directors to Bring Urgently Needed Change to Bitfarms Board
New Independent Directors Are Necessary to Fix
Riot Urges the Bitfarms Board to Ensure Shareholders Are Heard by Holding the Special Meeting Without Delay
Riot Withdraws Previous Proposal to Acquire Bitfarms for
The Special Meeting will give
To replace these individuals, Riot has nominated three exceptional candidates:
The bottom line is this: over the course of more than a year of attempting to engage constructively with the Bitfarms Board regarding a potential combination of
Why Board Change Is Needed Now at
Shareholders should consider the following:
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Bitfarms once again botched its CEO succession process –Bitfarms announced in March that it planned to seek a replacement for its CEO and President at the time,Geoffrey Morphy , but that he would leadBitfarms until a replacement could be identified. Then, onMay 13 ,Bitfarms abruptly announcedMr. Morphy had been terminated immediately after he filed a$27 million lawsuit againstBitfarms . The sudden termination of theBitfarms CEO without a transition plan in place at a crucial period of execution forBitfarms and the industry, as well as the lawsuit allegations – which, if accurate, raise serious questions about whether certain directors are committed to acting in the best interests of allBitfarms shareholders – represent a dangerous failure of leadership by the current Bitfarms Board.
This was not an isolated occurrence:Mr. Morphy was the fourthBitfarms CEO in five years. The ability to effectively identify, recruit and oversee a CEO is a fundamental duty of a board, and is essential to a well-functioning company’s performance. The persistent and inarguable inability of the Bitfarms Board to adequately manage CEO succession is a clear indication that change is needed, and, as longtime directors, Messrs. Bonta and Finkielsztain bear direct responsibility.
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Bitfarms’ Board has been unwilling to engage constructively with Riot –Following approximately 13 months of attempting to meaningfully engage with
Bitfarms regarding a potential combination ofBitfarms and Riot, Riot delivered a private acquisition proposal to the Bitfarms Board onApril 22, 2024 . After providing no constructive response, despite repeated follow up by Riot, the Bitfarms Board demanded that Riot sign a confidentiality agreement that included an excessive and off-market standstill of more than three years and, soon after, advised that the offer was too low, without any guidance as to what terms it would consider acceptable, or any other commentary.
Since then, Riot has made multiple attempts to work constructively withBitfarms toward a mutually beneficial combination – including sending several private letters to the Bitfarms Board proposing paths forward. Instead of engaging in good faith,Bitfarms has responded by implementing a shareholder rights plan – or “poison pill” – with a 15% trigger that is well below the customary 20% threshold. The 15% trigger is in direct conflict with established legal and governance standards, including those published by leading proxy advisory firmsInstitutional Shareholder Services Inc. andGlass, Lewis & Co. Bitfarms’ poison pill sets a dangerous precedent for Canadian boards seeking to protect their positions at the expense of shareholders, and Riot will be applying to theOntario Capital Markets Tribunal to cease-trade the poison pill.Bitfarms has also made unwarranted and highly negative attacks against Riot and sought to falsely call into question Riot’s intentions and objectives. Even after the adoption of the off-market poison pill, Riot offered the Bitfarms Board an opportunity to avoid the Special Meeting by jointly refreshing the Bitfarms Board.Bitfarms rejected this olive branch. This pattern of behavior reinforces the entrenched mentality of the current Bitfarms Board and its unwillingness to act in the best interests of allBitfarms shareholders.
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Bitfarms shareholders have lost confidence in their Board – At Bitfarms’ Annual General and Special Meeting of Shareholders held onMay 31, 2024 ,Bitfarms shareholders voted by a significant margin not to re-elect director and co-founderEmiliano Grodzki to the Bitfarms Board. Further, since Riot made its proposal public onMay 28 , Riot has been contacted by numerousBitfarms shareholders who have conveyed support for fully exploring a combination between Riot andBitfarms . These shareholders have also expressed a lack of confidence in the ability of the current Bitfarms Board to properly oversee a strategic alternatives process, successfully set and guide Bitfarms’ priorities moving forward and, ultimately, act in the best interests ofBitfarms and all of its shareholders.
Riot is asking thatBitfarms let the views of its shareholders be heard. Based on the response to Riot’s public statements onBitfarms , Riot is confident it is not alone in believing that Bitfarms’ corporate governance is broken, and that the status quo cannot be allowed to continue.
Riot’s Director Nominees Are Independent, Highly Qualified and Ready to Serve
It is clear that directors with fresh perspectives are needed to address the issues in the
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John Delaney , a government and public affairs expert with experience in the public and private sectors who currently serves as President ofFlagler College , Of Counsel at government relations firmThe Fiorentino Group and Of Counsel at law firmRogers Towers P.A . Previously, he served in numerous political roles, including as the Mayor ofJacksonville – the 12th largest city by population inthe United States . John currently serves as a director on the board of privately-heldMain Street America Insurance (formerly TheMain Street America Group ), and previously was on the boards ofJacksonville Bancorp, Inc. (formerly Nasdaq: JAXB) andFlorida Rock Industries, Inc. (formerly NYSE: FRK) – both of which were successfully acquired. John will bring decades of public policy and government relations knowledge, which is critical to the Bitcoin mining industry going forward, as well as crucial hands-on experience overseeing successful sale processes as a public company director.
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Amy Freedman ,a corporate governance and public capital markets expert with over 25 years of experience. She is currently an advisor toEwing Morris and Co. Investment Partners and toLongacre Square Partners . Prior to serving as an advisor to Ewing Morris,Ms. Freedman was a Partner and Head of Engagement Fund Investing at Ewing Morris. Previously, she was CEO ofKingsdale Advisors , a leading shareholder services and advisory firm, and spent over 15 years in capital markets as an investment banker with global firms including (NYSE: SF) andStifel Financial Corp . (NYSE: MS).Morgan Stanley Ms. Freedman is currently a director on the boards of (TSX: MND, OTCQB: MNDJF), Irish Residential Properties REIT plc (ISE: IRES) andMandalay Resources Corporation American Hotel Income Properties REIT (TSX: HOT.UN, HOT.U).Ms. Freedman is also currently a director ofCanaccord Genuity (TSX: CF), but her tenure on the board ofCanaccord Genuity will end onAugust 9, 2024 , as she is not standing for re-election. She formerly served on the board of (TSX:Park Lawn Corporation PLC, PLC .U). Amy will bring decades of experience helping boards improve corporate governance and evaluate complex M&A transactions and possesses a unique perspective from having served as both a public company advisor and director.
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Ralph Goehring , a financial and energy expert with extensive experience serving as a public company CFO. Ralph is currently a Business Consultant to Global Clean Energy Holdings, Inc. (OTCQB: GCEH), where he previously served as CFO, and is also the founder and CEO ofSandDollar Financial, LLC , an accounting firm that provides outsourced accounting and CFO services. Formerly, he was the CFO of bothBonanza Creek Energy, Inc. andBerry Petroleum Company . Ralph is currently President and CEO, and a board member, of privately-held Black Horse Resources, and previously served on the board ofStrathmore Minerals Corp. (formerly TSX: STM), which was successfully sold. Ralph will bring relevant energy industry and executive leadership experience, as well as extensive public company financial, accounting and tax expertise – which is integral to any potential M&A process.
Together, these three individuals possess the right fit-for-purpose skillsets and experience to be able to objectively help oversee the strategic alternatives process at
Next Steps
The Bitfarms Board should demonstrate respect for the rights of its shareholders by holding the Special Meeting without delay. Any gamesmanship or tactics to avoid calling the Special Meeting as soon as possible will only be further evidence of entrenchment and a disregard for the will of Bitfarms’ shareholders.
Riot continues to believe that a combination of
Canadian Early Warning Disclosure
Riot includes the following disclosure pursuant to Part 3 of Canadian National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues and Part 5 of Canadian National Instrument 62-104 – Take-Over Bids and Issuer Bids in respect of
Riot’s early warning report dated
Riot intends to review its investment in
Riot will file the early warning report in accordance with applicable securities laws, which will be available under the Company’s profile at www.sedarplus.ca. The address of Riot is
For further information and to obtain a copy of the Early Warning Report, please see the Company’s profile at www.sedarplus.ca or contact
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About
Riot’s (NASDAQ: RIOT) vision is to be the world’s leading Bitcoin-driven infrastructure platform. Our mission is to positively impact the sectors, networks and communities that we touch. We believe that the combination of an innovative spirit and strong community partnership allows Riot to achieve best-in-class execution and create successful outcomes.
Riot, a
For more information, visit www.riotplatforms.com.
Cautionary Note Regarding Forward Looking Statements
Statements contained herein that are not historical facts constitute “forward-looking statements” and “forward-looking information” (together, “forward-looking statements”) within the meaning of applicable
Information in Support of Public Broadcast Exemption under Canadian Law
The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable corporate and securities laws. Shareholders of the Company are not being asked at this time to execute a proxy in favour of Riot’s director nominees or in respect of any other matter to be acted upon at the Special Meeting. In connection with the Special Meeting, Riot intends to file a dissident information circular in due course in compliance with applicable corporate and securities laws. Notwithstanding the foregoing, Riot has voluntarily provided in, or incorporated by reference into, this press release the disclosure required under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”) and has filed a document (the “Document”) containing disclosure prescribed by applicable corporate law and disclosure required under section 9.2(6) of NI 51-102 in respect of Riot’s director nominees, in accordance with corporate and securities laws applicable to public broadcast solicitations. The Document is hereby incorporated by reference into this press release and is available under the Company’s profile on SEDAR+ at www.sedarplus.ca. The registered office of the Company is
Neither Riot nor any director or officer of Riot is requesting that Company shareholders submit a proxy at this time. Once formal solicitation of proxies in connection with the Special Meeting has commenced, proxies may be revoked by a registered holder of Company shares: (a) by completing and signing a valid proxy bearing a later date and returning it in accordance with the instructions contained in the accompanying form of proxy; (b) by depositing an instrument in writing that is signed by the shareholder or an attorney who is authorized by a document that is signed in writing or by electronic signature; (c) by transmitting by telephonic or electronic means a revocation that is signed by electronic signature in accordance with applicable law, as the case may be: (i) at the registered office of the Company at any time up to and including the last business day preceding the day the Special Meeting or any adjournment or postponement of the Special Meeting is to be held, or (ii) with the chair of the Special Meeting on the day of the Special Meeting or any adjournment or postponement of the Special Meeting; or (d) in any other manner permitted by law. In addition, proxies may be revoked by a non-registered holder of Company shares at any time by written notice to the intermediary in accordance with the instructions given to the non-registered holder by its intermediary.
This press release and any solicitation made by Riot in advance of the Special Meeting is, or will be, as applicable, made by Riot, and not by or on behalf of the management of the Company. Proxies may be solicited by proxy circular, mail, telephone, email or other electronic means, as well as by newspaper or other media advertising and in person by managers, directors, officers and employees of Riot who will not be specifically remunerated therefor. In addition, Riot may solicit proxies by way of public broadcast, including press release, speech or publication and any other manner permitted under applicable Canadian laws, and may engage the services of one or more agents and authorize other persons to assist it in soliciting proxies on their behalf.
Riot has entered into agreements with
The costs incurred in the preparation and mailing of any circular or proxy solicitation by Riot will be borne directly and indirectly by Riot. In the event any of the Nominees are elected or appointed to the Bitfarms Board, Riot intends to seek reimbursement from
None of Riot, any director or officer of Riot nor any associate or affiliate of the foregoing (i) has any material interest, direct or indirect, by way of beneficial ownership of securities of the Company or otherwise, in any matter to be acted upon at the Special Meeting, other than the election of directors, or (ii) has or has had any material interest, direct or indirect, in any transaction since the beginning of the Company’s last completed financial year or, other than the proposal submitted by Riot to
No Offer to Purchase or
This press release is for informational purposes only and is not intended to and does not constitute an offer to sell or the solicitation of an offer, or an intention to offer, to subscribe for or buy or an invitation to purchase or subscribe for any securities, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. Such an offer to purchase securities would only be made pursuant to a registration statement, prospectus, tender offer, takeover bid circular, management information circular or other regulatory filing filed by Riot with the
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