Nickel 28 Responds to Value Destructive, Highly Dilutive, Unsolicited and Non-Binding Financing Proposal from Shareholder, Announces New Independent Director
NEWS RELEASE TSX Venture: NKL
FSE: 3JC0
NICKEL 28 RESPONDS TO VALUE DESTRUCTIVE, HIGHLY DILUTIVE,
UNSOLICITED AND NON-BINDING FINANCING PROPOSAL FROM
SHAREHOLDER, ANNOUNCES NEW INDEPENDENT DIRECTOR
• Unsolicited, coercive, non-binding and self-serving proposal would result in a materially
diminished dividend to all shareholders upon Ramu debt repayment
• Opportunistic proposal and its demands ha ve been unanimously rejected by the
Company’s Board of Directors, with the s upport of the Company’s largest institutional
shareholders.
• BMO Capital Markets and Kingsdale Advisors re tained as strategic advisors to help
defend shareholder value and protect shareholders against other opportunistic or coercive
actions that would harm shareholder interests
• Nickel 28 announces appointment of new independent director Lance Frericks
TORONTO, ONTARIO, February 8, 2023 —Nickel 28 Capital Corp. (“ Nickel 28 ” or the
“Company”) (TSXV: NKL) (FSE: 3JC0) today publicly responds to an unsolicited, non-biding
and self-serving proposal received from a shareholder of the Company.
On February 6, 2023 the Company received a letter addressed to its board of directors (the
"Board") from a shareholder proposing a value dest ructive, coercive and highly dilutive US$15
million private placement financing. The shareholder’s stated purpose for the financing would be
to accelerate the Company's business plans.
The shareholder demanded a response by 5:00 p.m. on February 8, 2023. Nickel 28 is issuing this
news release so that all shareholders are made aware of the Company’s response to these self-
serving demands.
In connection with its proposal, the shareholde r demands the immediate reconstitution of the
Board, including the appointment of two unidentified nominees of the shareholder, as well as the
grant of preferential investor rights to the share holder, all of which woul d in effect give the
shareholder a position of significant influence over the Company’s affairs and governance, without
offering a meaningful premium or allowing other shareholders to participate on equal terms or
affording them an opportunity to vote on such nominees or proposals.
Following review, the Board has unanimously determined that the unsolicited proposal is not value
enhancing for the Company or its shareholders, other than for the shareholder making the proposal.
The Board is of the view that the value of the Company’s assets is far in excess of the value implied
by the proposed financing, such that the private placement would be value destructive and
economically dilutive for all other shareholders. Management and the Board who collectively hold
approximately 25% of the Company’s issued and outstanding common shares calculated on a
fully-diluted basis are strongly opposed to this opport unistic and coercive proposal and remain
fully aligned with the interests of minority shareholders.
Management of the Company has discussed this unsolicited proposal on a confidential basis with
several of the Company's largest outside institutional shareholders, who collectively hold in excess
of 10% of the issued and outstanding common shares. These shareholders have similarly expressed
opposition to the shareholder's proposal, identifying c oncerns consistent with those identified by
Management and the Board of Directors, as set out above.
Having taken advice from its lega l and professional advisors, th e Board unanimously rejects the
unsolicited proposal as represen ting a self-serving, opportunistic and coercive attempt by a
shareholder to extract value and exercise significant influence over the Company’s direction solely
for its own benefit, at the expense of, and to the detriment to, all other shareholders of Nickel 28.
The purported value offered by the proposal woul d represent a significant discount to the
Company's current assessment of the financial value of its interest in the Ramu Nickel joint venture
and its royalty portfolio. In addition, a US$15 million financing would not meaningfully accelerate
the timing for repayment of the remaining US$73 million Ramu joint venture debt which is non-
recourse, having no fixed term, and bears interest at less than current market rates. Furthermore,
such proposal would result in a significant reduction in the di vidends per share paid upon
extinguishment of such debt.
As stated in the Company’s January 30, 2023 press release, Nickel 28 believes that the repayment
of the Ramu debt and the commencement of th e payment of dividends represents a pivotal
inflection point. One of the most problematic aspects of this proposal is that it coincidentally comes
immediately following the Company's public reiteration of its dividend policy and debt repayment
strategy to enhance value for all shareholders. In contrast, the sh areholder's dilutive financing
proposal would hand over a significant sharehol ding position at a significant cost to all
shareholders while only shortening the repayment of the Ramu debt by a matter of months.
Interestingly, Nickel 28 notes that the shar eholder, in recent writt en communications, had
suggested that the Company deploy its cash to repurchase additional outstanding common shares
of the Company, which if implemented would have delayed the repayment of the Company's debt,
while increasing the shareholder's percentage interest in the Company. Perversely, now this same
shareholder wants to dilute other shareholders in order to increase its own undisclosed share
ownership in the Company. The shareholder's flip-flop underscores the performative, unprincipled
and opportunistic nature of the proposals rece ived. In addition, written correspondence from the
shareholder has also evidenced a fundamental misunderstanding of the manner in which the
Company’s joint venture interest at Ramu is oper ated. This, and the fact that the shareholder's
proposal demands an immediate capitulation from the Company to its unsolicited proposal without
even revealing its proposed director nominees clearly demonstrates its lack of credibility.
In recent days the shareholder has taken steps to obtain lists of the shareholders of Nickel 28,
presumably with the intention of soliciting proxies (although the shareholder has not prepared and
filed a dissident proxy circular). Nickel 28 urges its shareholders to exercise caution and to take
no action in response to any solicitation or communication made by or on behalf of any shareholder
in respect of any of the proposals described above.
The Board and Management of Nickel 28, informed by their legal and professional advisors, will
continue to act in and protect the best interests of the Company and all of its shareholders against
opportunistic or coercive actions that would harm the interests of Nickel 28 and its shareholders.
Appointment of New Independent Director
Nickel 28 is pleased to announce today the appoint ment of Lance C. Frericks to the Board of
Directors, effective immediately. With the appointment of Mr. Frericks, the Board of Directors is
now comprised of a majority of independent directors.
“We are thrilled to welcome Lance Frericks to Nickel 28's Board of Directors,” said Executive
Chairman Anthony Milewski. “He joins the Boar d as a strong independent voice. Among other
things, Lance brings with him a deep understand ing of both the capital markets and commodities
markets, making him a highly valuable addition to our Board at this important time for the
company.”
Mr. Frericks is currently a private investor and corporate director. Mr. Frericks started his career
at the CME group as a Eurodollar options trader before transitioning to proprietary trading
activities on the S&P 500 Index. For over 20 years, Mr. Frericks was one of the largest traders in
the S&P pit, managing capital and serving as a mark et liquidity provider. He holds a Bachelor of
Arts from Western Illinois University.
Appointment of Strategic Advisors
The Company has retained BMO Capital Markets as its financial advisor and Kingsdale Advisors,
North America's leading strategic shareholder advisory and communications firm, to act as its
strategic advisor. Bennett Jones LLP and Stikeman Elliott LLP serve as legal counsel to the
Company.
About Nickel 28
Nickel 28 Capital Corp. is a nickel-cobalt producer through its 8.56% joint-venture interest in the
producing, long-life and world-cl ass Ramu Nickel-Cobalt Oper ation located in Papua New
Guinea. Ramu provides Nickel 28 with significant attributable nickel and cobalt production
thereby offering our shareholders direct exposure to two metals which are critical to the adoption
of electric vehicles. In addition, Nickel 28 manages a portfolio of 13 nickel and cobalt royalties on
development and exploration projects in Canada, Australia and Papua New Guinea.
Cautionary Note Regarding Forward-Looking Statements
This news release contains certain information which constitutes ‘forward-looking statements’ and
‘forward-looking information’ within the meaning of applicable Canadian securities laws. Any
statements that are contained in this news release that are not statements of historical fact may be
deemed to be forward-looking statements. Forwar d-looking statements ar e often identified by
terms such as “may”, “should”, “anticipate”, “exp ect”, “potential”, “believe”, “intend” or the
negative of these terms and similar expressions. Fo rward-looking statements in this news release
include, but are not limited to: statements with re spect to the potential impact of those certain
unsolicited proposal received by a shareholder of the Company; statements with respect to the
future value of the Company and its assets; statements related to the repayment of the Company’s
Ramu operating debt (including th e timing thereof) and the timing of repayments and payments
under the Ramu Nickel project joint venture agreement by the ope rator; statements related to the
Company's future use of excess cash flow and cash flow from the Ramu Nickel project; statements
related to global economic conditions and comm odities markets for nickel, cobalt and other
commodities; and statements with respect to th e business and assets of the Company and its
strategy going forward. Readers are cautioned not to place undue reliance on forward-looking
statements. Forward-looking statements involve known and unknown risks and uncertainties, most
of which are beyond the Company’s control. Should one or more of the risks or uncertainties
underlying these forward-looking statements materi alize, or should assu mptions underlying the
forward-looking statements prove incorrect, actua l results, performance or achievements could
vary materially from those expressed or implied by the forward-looking statements.
The forward-looking statements contained herein are made as of the date of this release and, other
than as required by applicable securities laws , the Company does not assume any obligation to
update or revise them to reflect new events or circumstances. The forward-looking statements
contained in this release are expressly qualified by this cautionary statement.
Neither the TSX Venture Exchange nor its Regu lation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy
or accuracy of this release. No securities regulatory authority has either approved or
disapproved of the contents of this news release.
Investor Contact:
Justin Cochrane, President
Telephone: +1 289 314 4766
Email: [email protected]