Arcturus Therapeutics Founder Joseph Payne Successfully Prevents Board’s Egregious Attempt to Dilute Shareholders
02 Mayo 2018 - 8:30AM
Joseph Payne, Founder and largest shareholder of Arcturus
Therapeutics Ltd. (NASDAQ:ARCT) (“Arcturus”), owning approximately
13.7% of the issued and outstanding shares, is praising the Israeli
District Court’s (the “Court”) decision to enjoin the attempt of
the Arcturus board of directors to undertake a highly dilutive
equity financing. Mr. Payne sought the injunction in
connection with his previously filed breach of fiduciary duty claim
against certain directors of Arcturus.
Mr. Payne filed the motion following the egregious attempt by
certain directors to sell 24.9% of Arcturus’ share capital to a
single purchaser at a purchase price that is more than 40% below
the trading price of Arcturus common shares prior to the
termination of Mr. Payne. In a balanced and reasoned 34-page
opinion, the Court rejected the board’s claim that it was acting
solely in furtherance of the interests of Arcturus and its
shareholders. The Court expressed concern that the board's
decision to sell shares was not being undertaken to raise necessary
working capital in light of Arcturus’ recent claim to have enough
cash to fund operations for two years. Instead, the Court
acknowledged that it was reasonable for Mr. Payne and other
shareholders to be concerned that the proposed stock issuance and
its timing and conditions were motivated by the board's personal
interests, namely their desire to keep control of Arcturus.
The Court focused on the conflicting interests of certain Arcturus
directors in determining that Mr. Payne may be able to demonstrate
that the proposed issuance, along with the myriad other actions
taken by this board since his termination, have resulted in a
breach of fiduciary duty to Arcturus and its shareholders.
"I am extremely disappointed to see the lengths to which this
board will go to keep their positions. After indefinitely
delaying our extraordinary shareholders meeting, the board has
tried – to no avail – to dilute shareholders in the face of
overwhelming shareholder opposition,” said Mr. Payne. “This
proposed financing was not about what is best for Arcturus. Rather,
it was another chapter in this board’s continuing story of
entrenchment, and waste of corporate resources. Diluting
shareholders by nearly 25% ahead of a shareholder vote at which
they will be removed is not in the best interest of shareholders
and is simply an affront to shareholder democracy.”
Mr. Payne further commented that, “This board appears to have no
intention of complying with their fiduciary duties and seems
willing to do anything and say anything while continuing to waste
shareholder money and resources in their desperate fight to retain
corporate control. The Court was not fooled by their
ever-changing story and Arcturus’ shareholders have no further
appetite for this behavior. It is evident that the board delayed
the EGM to buy time to consummate an unnecessary and highly
dilutive financing that would strengthen its position in the proxy
contest at the expense of the Arcturus shareholders.”
Mr. Payne filed a formal request calling for an Extraordinary
General Meeting (“EGM”) to revitalize Arcturus with a new board of
highly qualified independent and experienced nominees – Peter
Farrell, Andrew Sassine, James Barlow and Magda Marquet (the
“Nominees”). Instead of holding the meeting and heeding
the will of shareholders, the board resorted to a series of
entrenchment tactics that would have wasted substantial financial
resources and which would have, if not for the Court’s decision,
substantially diluted shareholders at a time when the share price
is near its 52-week low. These same directors
previously stressed the urgency of holding a shareholder meeting to
appoint an auditor. Then, they flip-flopped and delayed the
meeting indefinitely as a defensive tactic because they fear they
will be voted out as directors if an EGM is held.
In addition to attempting to entrench themselves through a
massive dilutive issuance, this board continues to file baseless
lawsuits and waste shareholder money, in a futile attempt to retain
control. In their most recent lawsuit, the board frivolously
sought an injunction to compel Mr. Payne and the Nominees and other
independent Arcturus shareholders to disclose that they formed a
“group” to vote their shares in favor of the Nominees and against
the current slate of directors. Despite the absence of an
iota of evidence to support this claim, these directors had the
audacity to seek an extraordinary injunction while Mr. Payne was in
Israel appearing in Court for the benefit of all
shareholders. The court rejected the request for expedited
proceedings and denied the frivolous motion. The conflicted
directors continue to misuse the legal system and corporate
resources.
“As they spend more shareholder money to further entrench
themselves and intimidate shareholders, the board continues to lose
court battles, continues to lose shareholder support, and continues
to destroy shareholder value,” Mr. Payne said. “I remind this
board of their fiduciary duties and obligation to act in the best
interests of the company and all shareholders. I fervently implore
them to set a date for the EGM so shareholders can have their say
about the future of our company. I will continue to fight for
shareholders, for their best interests, for their value and most
important, to see that our exciting technologies and products are
best positioned to help patients in need.”
ADVISORSKingsdale Advisors is acting as
strategic shareholder and communications advisor to Mr. Payne.
For further information: Ian RobertsonExecutive
Vice PresidentCommunication StrategyKingsdale AdvisorsDirect:
646-651-1640Cell: 647-621-2646Email:
irobertson@kingsdaleadvisors.com
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