Action for breach of standstill and other
legal obligations initiated to defend the company and all
shareholders against Mittleman's self-interested attempts to seize
control of company and its assets
MONTREAL, July 22, 2019 /PRNewswire/ - Loyalty and
travel-focused consolidator Aimia Inc. (TSX: AIM) today announced
that it has commenced legal action in Toronto before the Ontario Superior Court of
Justice against the New York
City-based hedge fund Mittleman Brothers, LLC and related
parties (collectively, "Mittleman") (Docket Number:
CV-19-00624108-0000), in the interests of defending the company and
shareholders from continued breaches of contract, other unlawful
and destructive interference and ongoing, self-interested proposals
to seize control of the company and its assets.
The Statement of Claim details how Mittleman, in breach of the
letter agreement with Aimia dated March 23,
2018, (the "Agreement") and other legal obligations,
has (i) coordinated and communicated with certain current and
potential investors in the company, as well as Aimia employees,
regarding Mittleman's views of and plan to take over Aimia, its
substantial cash and non-cash assets and investments and its Board
of Directors, (ii) unlawfully induced other shareholders to
participate in a withhold campaign at the 2019 annual meeting of
shareholders (the "2019 AGM") on the basis of incomplete
views of the company and Mittleman's own intentions, and (iii)
improperly disclosed and received non-public and highly
confidential details of board deliberations and internal documents
concerning material transactions and core business matters. In
addition, the Statement of Claim sheds light on Mittleman's
self-interested agenda, evidenced by numerous proposals from
Mittleman including to merge Aimia with Mittleman, have Mittleman
take control of Aimia's cash and use Aimia's cash to acquire other
Mittleman investments.
Remedies sought by Aimia include damages as compensation for
prior breaches of law and contract, a declaration that Mittleman
has breached the Agreement, and a court order enjoining Mittleman
from taking further steps to remove or replace directors duly
elected at the 2019 AGM.
Aimia emphasizes that the decision to commence legal action
against a significant shareholder was not taken lightly and follows
significant deliberation regarding Mittleman's underlying
intentions and continued actions and their negative impact on the
company and all other shareholders. However, while unfortunate,
this course of action is required to protect the rights and
interests of the company and all other shareholders. Mittleman's
repeated and continued unlawful actions, even after the company
sent private notice, have left it with no option but to defend
itself and the interests of all shareholders by pursuing all legal
remedies available, including through the initiation of legal
proceedings.
Bill McEwan, Chairman of the
Board of Directors, said:
"It is highly regrettable that the Board has been forced to take
this action against Mittleman, despite our good faith in appointing
two of their directors last year and entering a standstill
agreement. The blatant violations of the agreement and the
misrepresentations and misleading statements by Mittleman must be
stopped in the interest of all shareholders and to allow the
company to continue executing its strategy to create value.
"Aimia's shareholders deserve to know the facts to make
informed decisions about their investment. Over the past year or
so, in multiple communications to and with this Board, Mittleman
has clearly stated its intentions to merge the company with
Mittleman's own investment firm, transfer substantial cash assets
for Mittleman to manage and ultimately take control of the
Board. It has tried to push the company into acquiring or
investing in companies with unrelated businesses in which Mittleman
has direct interests. At no time has Mittleman actually put forward
a serious and credible transaction or other proposal that would
benefit or make sense for the company. The Board has rejected these
demands, which would have only benefited Mittleman at the expense
of Aimia and other Aimia shareholders.
"Mittleman's clear attempt to interfere with the shareholder
vote at the 2019 AGM, in direct violation of its obligations to
Aimia, was just another attempt to take over the company for their
own benefit without offering anything, let alone a premium, to
Aimia's shareholders. Their recent public statements about the
company, including misrepresentations about the AGM and board
processes, are further evidence of Mittleman's intention to
continue interfering in the affairs of the company solely for their
own benefit."
Aimia also noted that if Mittleman truly believed that Aimia
would be better served under Mittleman's control and direction,
then it would make a formal all-cash offer to acquire the whole
company for Aimia's fair value, which Mittleman itself recently
stated was over $7.00 per common
share, plus a control premium. By Mittleman's own logic, anything
less would expropriate value from other shareholders.
Background to the legal proceedings
Aimia maintains an ongoing dialogue with its shareholders and is
committed to constructive engagement for the benefit of all
shareholders. In March 2018,
following discussions with Mittleman on Aimia's strategic direction
at the time, the Board agreed to nominate two Mittleman
representatives to the Board of Directors, including Philip Mittleman, the Chief Executive Officer
& President of Mittleman, pursuant to the Agreement, a
customary stand-still, support and confidentiality agreement.
Subsequently, on March 28, 2019, the
company announced its new strategic business plan, which was
approved and supported by the full Board of Directors, including
Philip Mittleman.
Since 2018, Aimia has undergone significant positive changes in
fundamental aspects of its business, strategy and capital
structure. Reflecting a deliberate and previously announced process
to re-align the Board with the new strategic direction, the company
has also made substantial changes in the Board's composition, with
three new independent directors added, including two highly
qualified appointees last week, and four others retiring since
March.
Over the term of the Agreement and thereafter, based on
Mittleman's observed behaviour, correspondence and other data
points, Aimia became increasingly concerned that
Mittleman was not complying with its obligations under the
Agreement and notified Mittleman of same in writing on numerous
occasions in 2018 and 2019, including leading up to and immediately
following the 2019 AGM.
On July 1, 2019, Aimia sent a
private letter to Mittleman outlining the fact that it has
substantial evidence that Mittleman has repeatedly breached its
contractual and other legal obligations as far back as April 2018, prior to the 2018 annual meeting of
shareholders, and continuing up to, with respect to and following
the 2019 AGM. In addition to Mittleman not replying to Aimia's
letter in any direct or meaningful manner, subsequent and
continuing statements and misrepresentations by Mittleman indicate
that they intend to continue breaching their obligations owing to
the company, with the goal of benefiting Mittleman to the detriment
of Aimia and ultimately other shareholders. It is in this context
that Aimia concluded that initiating legal proceedings against
Mittleman was necessary to protect the rights and interests of the
company and all other shareholders.
About Aimia
Aimia Inc. (TSX: AIM) is a loyalty and travel consolidator
focused on growing earnings through its existing investments and
the targeted deployment of capital in loyalty solutions and other
sub-sectors of the rapidly-expanding loyalty and travel
markets.
Its investments in travel loyalty include the Club Premier
program in Mexico, which it
jointly controls with Aeromexico through its investment in PLM, and
an investment alongside Air Asia in travel technology company
BIGLIFE, the operator of BIG Loyalty.
Aimia also operates a loyalty solutions business, which is a
well-recognized, global full-service provider of next-generation
loyalty solutions for many of the world's leading brands in the
retail, CPG, travel & hospitality, financial services and
entertainment verticals.
For more information about Aimia, visit corp.aimia.com.
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SOURCE Aimia Inc.