TORONTO, May 28, 2020 (GLOBE NEWSWIRE) -- Dealnet Capital Corp. (TSX VENTURE: DLS) (“Dealnet” or the “Company”) has finally announced a date for the Company’s annual general and special meeting of shareholders  (the “Meeting”) in response to the requisition issued by the Concerned Shareholders (being Capital Partners Corporation (“Capital Partners”) and Municipal Home Service Inc.).  Rather than setting a timely Meeting, they unfortunately chose to delay the verdict until September 22, 2020, a date that is more than four months after the Concerned Shareholders requisitioned the Meeting.

“We are continually disappointed in the entrenched Dealnet incumbents’ delay to face the shareholders. The Meeting should have already been held,” said Steven Small, CEO of Capital Partners. “Dealnet’s CEO Brent Houlden dismisses the dissident action as a distraction – apparently shareholder interests are also a distraction as Mr. Houlden continues to enrich himself, his daughter and insiders as Dealnet’s shareholders endure an underperforming trapped investment.”

Meanwhile, Dealnet’s only response to the valid concerns raised by the Concerned Shareholders is unsubstantiated and absurd personal attacks and to offensively lay blame on others during their own tenure. They provide misleading optimism, predictions and promises. The market’s rejection of their management is evidenced by the Company’s thinly traded shares which are languishing at a price below Dealnet’s liquidation value.

“The incumbents’ supposed optimism should have them eager to face shareholders, not delay the Meeting,” said Dr. Small. “We are ready and our confidence is high.”

The Concerned Shareholders believe that the delay of the Meeting assures Dealnet’s continuing decline and escalates the Going Concern warnings described in Dealnet’s recent financial statement filings. While the incumbents mismanage, the Concerned Shareholders offer alternative leadership from a slate of proven business creators with demonstrated success and specific industry expertise that the incumbent Dealnet directors lack.

“We will expose them and replace them,” said Dr. Small. “Ultimately their shameful delay wastes critically necessary time needed to ensure action to save Dealnet as a going concern.”

By the numbers, the Concerned Shareholders believe that there are far greater challenges ahead that the entrenched Board fails to reveal or address.  The Company’s management discussion and analysis for the three months ended March 31, 2020 (the “Q1 2020 MD&A”) outlines ‘select’ numbers but makes it almost impossible for a shareholder to determine what is really going on. Dealnet has failed to address essential concerns including but not limited to;

  1. Liquidity: Past assurances of ample liquidity were seemingly false given Dealnet’s recent urgent and reckless short-term emergency liquidity loan of $6.25 million with an interest rate of approximately 9% (including fees).  This added debt burden compounds the impending settlement dates in 2021 to repay tens of millions of fixed term “Warehouse Debentures”. Why did Dealnet need this expensive emergency loan? How do they propose to repay these Debentures when due?
  2. War Chest: The Company’s purported “war chest” of cash to ensure liquidity begins to flow into the Company too late to meet debt obligations. The War Chest is also dramatically impacted by liquidations, defaults and delinquencies. What can Dealnet do to preserve value and pay its obligations as due?
  3. Profitability: The board boasts of “profitability” in the first quarter of 2020 but careful readers see through the misplaced optimism and the stock has not responded. Is “profitability” due to a lack of growth, deferred payments and altered compensation arrangements?
  4. Growth Myth: The Q1 2020 MD&A states that portfolio growth in the quarter was $4 million, yet “new originations” for the period were $14 million. Does this mean the portfolio is shrinking by $10 million per quarter?
  5. COVID-19: The expected substantial COVID-19 credit impact receives only limited disclosure when massive defaults and deferrals loom. Why hasn’t Dealnet disclosed realistic and detailed information on the potential impact of the COVID-19 pandemic?
  6. Compensation: 2019 salary and bonus compensation remains undisclosed and the board and executives of Dealnet remain egregiously overcompensated. Why are they delaying this disclosure by another four months?

The Concerned Shareholders expect the incumbents’ eventual Circular to contain obscured, unsubstantiated, misleading and unreliable facts, figures, predictions and promises to misdirect in an attempt to solicit shareholder voting support. “The Concerned Shareholders are eager to share their vision and comprehensive plan to save Dealnet – stay tuned,” concluded Dr. Small.

The information contained in this news release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable securities laws. Shareholders are not being asked at this time to execute a proxy in favour of the nominees of the Concerned Shareholders. In connection with Dealnet’s annual general and special meeting of shareholders, the Concerned Shareholders may file and mail a dissident information circular in due course in compliance with applicable securities laws.

Forward Looking Statement

This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. All statements and information, other than statements of historical fact, included herein are forward-looking statements, including, without limitation, statements regarding activities, events or developments that the Concerned Shareholders expect or anticipate may occur in the future. These forward-looking statements can be identified by the use of forward-looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “believe” or “continue” or similar words and expressions or the negative thereof. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur or, even if they do occur, will result in the performance, events or results expected. We caution readers not to place undue reliance on forward-looking statements contained herein, which are not a guarantee of performance, events or results and are subject to a number of risks, uncertainties and other factors that could cause actual performance, events or results to differ materially from those expressed or implied by such forward-looking statements.

Readers are cautioned that all forward-looking statements involve known and unknown risks and uncertainties, including those risks and uncertainties detailed in the continuous disclosure and other filings of Dealnet, copies of which are available on the System for Electronic Document Analysis at www.sedar.com. We urge you to carefully consider those risks and uncertainties. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. Unless expressly stated otherwise, the forward-looking statements included herein are made as of the date of this news release and the Concerned Shareholders disclaim any obligation to publicly update such forward-looking statements, except as required by applicable law.

Contact Information

Dr. Steven Small
(647) 699-5066 
ssmall@cpcorp.ca


Source: Concerned Shareholders of Dealnet Capital Corp.

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