Riot Issues Open Letter to Fellow Bitfarms Shareholders Ahead of Upcoming Special Meeting
Details the Need for Further Change at
Reduces Proposed Slate of New Directors From Three to Two in Light of Bitfarms’ Recent Moves in Response to Public Pressure from Riot
Warns Bitfarms Not to Take Any Additional Actions to Entrench the Existing Board Prior to the
Additional Information Available at www.ABetterBitfarms.com
Dear Fellow Bitfarms Shareholders,
Riot currently owns approximately 19.9% of
Further Board Change Is Needed
Our focus remains on fixing Bitfarms’ broken governance to enhance value for all shareholders. In order to achieve this objective, additional fresh perspectives are required in Bitfarms’ boardroom.
Since we initiated our campaign, two of Bitfarms’ three co-founders –
While these changes represent a step in the right direction, they have been reactive and insufficient to address Bitfarms’ broken governance. These actions followed Riot’s sustained public pressure and would not have occurred had Riot not challenged the entrenchment of the Bitfarms Board. The evidence is clear:
Consider the following examples of the Bitfarms Board’s defensive posture and prioritizing entrenchment over engagement:
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Bitfarms’ failed off-market poison pill: The unilateral adoption of a shareholder rights plan (the “Poison Pill”) with a 15% threshold ran counter to established legal and governance standards. This entrenching Poison Pill was rightfully invalidated and cease traded by the
Ontario Capital Markets Tribunal in response to Riot’s application.Had Riot not acted, the Poison Pill would have prejudiced all Bitfarms’ shareholders and set a damaging precedent for the Canadian capital markets. The Bitfarms Board knew better but disregarded these concerns.
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A unilateral Board refresh: On
June 27, 2024 ,Bitfarms announced the addition ofFanny Philip to the Bitfarms Board.Bitfarms chose to make this appointment without consulting Riot, its largest shareholder, even though the Bitfarms Board knew that we had proposed a slate of highly qualified director nominees and specifically asked that we be consulted before any board changes were made.
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The concerning Stronghold acquisition announcement: Shareholders should seriously question the timing of Bitfarms’ announcement of its agreement to acquire Stronghold, notwithstanding the pending Special Meeting, and the price that it was willing to pay. The
US$175 million transaction (includingUS$50 million of assumed debt) represents a greater than 100% premium to Stronghold’s closing share price on the day prior to the announcement, which greatly exceeds the premiums of precedent all-stock transactions in which sellers participate in any potential upside. Moreover, while announced as a “highly accretive” transaction with “compelling economics,” shareholders have not yet been provided an estimate of capital expenditures that will be required to fund the development of Stronghold’s sites. These points are especially troubling given that Stronghold was effectively “for sale” for a significant period of time, with its strategic review process publicly announced earlier this year, and clearly no other participant in the sector was willing to pay such an inflated price. As Bitfarms’ largest shareholder, we are concerned that the Bitfarms Board did not enter into this transaction with the best interests of Bitfarms’ shareholders in mind. Based on the transaction terms, the Stronghold acquisition appears to be yet another action designed to entrench the Bitfarms Board.
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A continued lack of engagement with Riot: We have still seen no change in posture from the Bitfarms Board regarding its willingness to work constructively with Riot to consider beneficial changes to the Bitfarms Board and/or a mutually beneficial combination that could maximize value for all
Bitfarms shareholders.
The Path Forward – Electing Riot’s Nominees
Previously, we announced that we would nominate three independent and highly qualified nominees for election to the Bitfarms Board at the Special Meeting. With the resignations of Messrs. Bonta and Grodzki, our campaign to fix Bitfarms’ broken governance has already resulted in progress towards addressing the founder-led culture that we believe has been harmful to the Bitfarms Board.
As a result, we will be reducing our proposed slate of new directors from three to two –
Bitfarms Needs to Halt its Defensive Tactics and Let Shareholders Be Heard
With the Special Meeting less than two months away, we sincerely hope that
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We look forward to mailing our solicitation materials and giving shareholders a chance to vote for our two Nominees in the near future. We are confident that, together, we can help ensure a Better Bitfarms moving forward.
Yours sincerely,
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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 the 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 the 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. However, to the extent permitted under applicable law, 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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