'Value Has Been Destroyed' - RIV Capital's Largest Shareholder JW Asset Management Urges Leadership Changes

Zinger Key Points
  • Immediate Board refresh is needed to preserve shareholder value and maximize the Company's potential.
  • Riv Capital's annual retainer compensation for non-employee directors for 2023 was increased from $120,000 to $225,000.

JW Asset Management, LLC , the largest shareholder of RIV Capital Inc. CNPOF RIV, controlling and directing approximately 19.77% of the issued and outstanding class A common shares of the company, has requisitioned a special meeting of shareholders of RIV Capital for the purpose of replacing five of the seven directors on the board of the company.

"It's clear that change is required at RIV Capital, and I am confident that the independent and experienced individuals nominated to join the newly constituted board will provide the judgment, oversight and business acumen required to change course and build value", stated Jason Wild, president and chief investment officer at JW Asset Management.

Background To The Requisition

JW Asset Management stated:As shareholders, we must recognize that the current board and management team have failed to create value. In fact, value has been destroyed. Since the listing of the shares on the TSX Venture Exchange in September 2018, upon Canopy Rivers Inc.'s reverse takeover of AIM2 Ventures Inc., the share price has declined by approximately 97% from an opening price per share of $10.75. More recently, since August 9, 2021, the day before the initial investment by The Hawthorne Collective, Inc. was announced, the stock has fallen approximately 82% from $1.77.”

According to JW Asset Management, Riv Capital’s leadership team pushed ahead with an ill-advised acquisition of a significantly over-priced New York asset when all signals in the marketplace were flashing caution. The company disregarded JW Asset Management's comments and analysis and proceeded to sign a purchase agreement that completely altered the business model of the company and required over $200 million in cash payments. According to JW Asset Management, the board of Riv Capital recently pushed through an increase in the annual retainer compensation for non-employee directors for 2023 from $120,000 to $225,000.

The Requisition

  • JW Asset Management is seeking to replace five of the seven current board members with five independent directors, who are ready to represent the interests of shareholders by providing new strategic viewpoints for the company and exercising appropriate governance and oversight with respect to company management.

  • JW Asset Management is also seeking a mandate from shareholders for the newly constituted board to establish a special committee composed of each of the elected JW Asset Management nominees to investigate the actions of Hawthorne and its board nominees to determine whether there is any cause for the company to bring an action or other claim against any of them.

  • Additionally, JW Asset Management will request that the newly constituted board vote on a compensation structure more in line with levels from 2022.

  • JW Asset Management requests that the special meeting be held promptly, and by no later than March 15, 2023.

The Nominees

JW Asset Management seeks the removal of Joseph Mimran, Laura Curran, Christopher Hagedorn, Richard Mavrinac and Mark Sims from the board and the nomination of the following individuals to fill their vacancies:

  • Raymond Edward Boyer

  • Samuel Brill

  • Chad Bronstein

  • Christopher Leggett

  • Stevens J. Sainte-Rose

Other Boards of Reporting Issuers

As at the date of this requisition, Chad Bronstein is a director of Jones Soda Co. JSDA JSDA and Samuel Brill is a director of SLANG Worldwide Inc. SLGWF SLNG. No other JW Asset Management nominee is currently a director or trustee of any other reporting issuer.

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Photo by Esteban Lopez on Unsplash

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Posted In: CannabisNewsPenny StocksMarketsChad BronsteinChristopher HagedornChristopher LeggettJason WildJoseph MimranJW Asset ManagementLaura CurranMark SimspremiumRaymond Edward BoyerRichard MavrinacSamuel BrillStevens J. Sainte-RoseThe Hawthorne Collective
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