Sand Grove Responds to Statement by the Otello Nomination Committee Regarding Proposed Changes to the Board and Nomination Committee of Otello
Sand Grove Capital Management LLP (“Sand Grove”) notes the statement made on the 28th of August by the Nomination Committee of Otello Corporation ASA (the “Company” or “Otello”) in respect of the upcoming Extraordinary General Meeting (“EGM”) to vote on proposed changes to the Board and Nomination Committee.
Sand Grove believes that, as has been our experience with all corporate governance bodies at Otello, the Nomination Committee failed to address the most important focus for all shareholders, that of value creation. The Nomination Committee provides no defence for the current Board of Directors’ self-evident failure to create value for shareholders.
We question the motivations of the existing shareholder-led Nomination Committee in supporting a Board that has failed on this most essential of tests. We note that Ludvig Lorentzen AS and Sundt AS who are both represented on the Nomination Committee have sold a material number of shares in Otello in 2020 at share prices close to current levels and we therefore question their confidence and faith in either the value of the assets of the Company or the ability of the current Board to deliver value for shareholders.
We note that certain shareholders currently represented on the Nomination Committee have spoken to Randel Freeman and both of the proposed Board candidates have made themselves available to shareholders and equity research analysts to allow shareholders to make their own determination on the candidates rather than rely on a Nomination Committee that we believe has prejudged the outcome of any conversation.
Sand Grove has spent considerable time interviewing many potential candidates and have proposed two extremely experienced and well qualified Board candidates. We believe the baseless accusations regarding Randel Freeman by the Nomination Committee are a further sign of their lack of professionalism. Randel Freeman has been continuously regulated and authorised without issue by the UK Financial Conduct Authority since 1996, which is widely recognised as one of the most stringent financial regulators globally. The link provided in the statement by the Nomination Committee is clearly intended to be suggestive and sensationalist. A brief internet search can determine that the references on the website are related only to private residential real estate investment opportunities in Portugal, conducted through a Maltese incorporated entity, as is typical structure for an investment of this nature. This clearly demonstrates the minimal level of investigation that the current Nomination Committee feels it is necessary to undertake. Despite the current Nomination Committee’s claims around the thorough level of vetting required for potential Board candidates, we note that when looking to replace Frode Jacobsen we understand that very limited diligence was in fact undertaken on only a single candidate under consideration who was proposed by the CEO of the Company.
We believe that it is important to have a complete and diverse range of skills represented on the Board to deliver value for shareholders. We believe the overall Board composition, when considering both the candidates we have proposed and the existing members, will have the full breadth of experience and abilities required. We again question the level of diligence the Nomination Committee is willing to undertake given that even a cursory glance at Kathryn Baker’s CV clearly demonstrates significant experience on the boards of technology companies including Catena Media plc, Data Respons ASA, Kuddle AS (now Spotline Inc.) and Hudya AS. Randel Freeman has also invested in a significant number of technology focused businesses throughout his investment career which began in 1989. This contrasts with the likely limited amount of technology experience that a full time corporate lawyer in private practice would have (as is the profile of existing director Birgit Midtbust) and we again view this as a lack of good faith shown by the Nomination Committee in their statement. We are also somewhat surprised that the Nomination Committee raises issue with the fact that Randel does not have any prior public board experience given that we believe this is also true of every other current Otello Board member who have all been proposed by this Nomination Committee.
The Nomination Committee references the recent annual general meeting. Sand Grove abstained from rather than voting against certain resolutions at the meeting. We felt it would have been irresponsible to introduce the risk of the Company not having a properly constituted Board, as could have been the case if we had voted against certain Board candidates without having appropriate alternatives in place. We note that if we had instead voted against the resolution on the compensation of the Nomination Committee along with all other abstaining shareholders, the resolution would have failed. This to us does not represent a vote of confidence in the existing Nomination Committee. Of further note, as a Board member Anooj Unarket has declined to receive any compensation from the Company to the benefit of all shareholders, whereas the existing Nomination Committee continue to draw compensation.
We view the accusation that Sand Grove is looking to ‘take control’ of either the Board or Nomination Committee as completely misleading. Other than Simon Davies, all the other proposed candidates are independent and professional individuals who would work in the interests of all shareholders. The allegation by the Nomination Committee is both unprofessional and baseless with no facts to support such an accusation. None of the Sand Grove proposals can be construed as “at the expense of…other shareholders”. We would reiterate that Sand Grove believes the Board should be focused on delivering value for all shareholders, a topic that the Nomination Committee does not seem to believe is worthy of reference in their statement.
Sand Grove’s sole objective from the proposals is and remains to deliver value for ALL shareholders.
Shareholders are encouraged to visit the website (www.upgradingotello.com) to learn more about the reasons for Sand Grove’s proposals and why they should VOTE FOR the proposed changes at the upcoming EGM to deliver value for all shareholders.
Anthony Kluk / Cas Sydorowitz / Dror Elkayam
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